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THE     RICARDIAN     RENT     THEORY 
IN    EARLY   AMERICAN   ECONOMICS 


BY  THE  SAME  AUTHOR 


INTRODUCTION  TO  ECONOMICS,  1919 


THE   RICARDIAN 
RENT  THEORY 

IN   EARLY 
AMERICAN   ECONOMICS 


By 

JOHN  ROSCOE  TURNER,  PH.D. 

Professor  of  Economics  in  New  Tork  University 

With  an   Introduction  by 
FRANK  ALBERT  FETTER,  Ph.D.,  LL.D. 

Profesior  of  Economics  in  Princeton   University 


4793  4 

THE    NEW    YORK   uisTIVERSITY    PRESS 

J2  WAVERLY   PLACE,  NEW   YORK   CITY 
I92I 


Copyright  1921,  by 
Thb  Niw  Toek  Univebbity  Pebba 


THE  NEW  YORK  UNIVERSITY  PRESS 

COMMITTEE    OF    PUBLICATION 

Abthtte  Huntington  Nason,  Ph.D.,  Chairman 
Director  of  the  Press 

Eaelb   Bbownell  Babcock,   Ph.D. 

Hakold   Diceinson    Sknioe,   M.D.,    Sc.D.,   P.R.C.S. 


KENNEBEC     JOUKNAL     PEESS.     AUGUSTA,     MAINE 


H3 

ri 
> 


d 


INTRODUCTION 

BY 

FRANK   ALBERT    FETTER 

OF 
PRINCETON  UNIVERSITY 


INTRODUCTION 

THE  writings  of  the  early  American  economists 
which  are  surveyed  in  this  study  have  been 
strangely  neglected  by  the    later    generations 
of  American  students.     The  article  by  Professor  C.  F. 
f^  Dunbar,  published  in  The  North  American  Review  in 
r^   1876,  is  the  only  previous  American  essay  purporting  to 
"^^v  treat  the  subject.     But  Dunbar's  article  consisted  almost 
entirely    of    a    description   of  American   conditions  as 
explaining  what  he  declared  to  be  the  utter  "sterility" 
of  American  economic  literature.     The  brief  portion  in 
which  he  spoke  of  writers  is  hardly  more  than  a  cata- 
logue of  names  and  titles  compiled  from  previous  re- 
«!    views.    Certainly  in  some  cases,  as  Doctor  Turner  shows, 
>^    and  possibly  in  most,   Dunbar  was  unacquainted  with 
the  originals.     Even  if  he  had  read  the  books,  he,  as 
a  representative  of  the  classical  school  ^  (which  he  be- 
lieved had  arrived  at  ultimate  truths  within  the  limits 
of  its  hypotheses),  was  not  .qualified  to  render  a  just 
estimate  of  the  theories  in  question,  however  competent 
he  was  in  the  field  of  money  and  banking. 

Forty  years  have  passed,  and  is  it  not  indeed  remark- 
able that  our  generation  of  economic  students,  so  thor- 
oughly grounded  otherwise  in  the  world's  literature  of 
economics,  should  know  little  or  nothing  of  these,  our 
own,  writers,  and  most  of  that  little  through  Dunbar's 
superficial  and  condemnatory  article  or  through  chance 
and  usually  disparaging  references  in  the  writings  of 
English  economists?    That  the  American  economists  of 

^  See  his  article  in  The   Quarterly  Journal  of  Economics,  I,  1,   1886. 


viii  THE    RICARDIAN    RENT    THEORY 

the  period  preceding  1880  have  been  almost  ignored  in 
Europe  is  not  remarkable,  but  that  they  should  have 
been  so  forgotten  and  neglected  by  their  own  country- 
men since  economic  studies  have  been  so  zealously  fos- 
tered in  America,  is  indeed  surprising. 

If  we  speculate  upon  an  explanation  of  this  neglect, 
two  reasons  suggest  themselves.  The  first  is  the  poor 
estimate  of  the  learning  and  equipment  of  the  early 
American  economists  in  comparison  with  their  English 
contemporaries;  the  second  is  the  dominance  of  the 
Ricardian  economics  in  America,  especially  after  J.  S. 
Mill's  work  gave  it  a  new  appeal  and  a  new  vogue  among 
American  readers.  Perhaps  these  are  but  two  aspects 
of  the  same  reason. 

Doubtless  the  prevailing  opinion  is  that,  in  the  period 
from  181 5  to  1870  (let  us  say),  the  development  of  eco- 
nomics in  England  was  in  the  hands  of  men  of  good 
general  and  special  education— trained  economists,  to  use 
the  modern  term — whereas,  it  is  thought,  American 
writers  of  that  time  were  ill-trained  amateurs,  publicists, 
and  pamphleteers.  We  forget  that  there  were  in  Eng- 
land at  that  time  no  "trained  economists"  whatever,  such 
as  we  now  understand  by  that  term  applied  to  men  who 
prepare  by  long  studies  under  competent  teachers  for 
an  academic  life-career.  British  economists  were  self- 
educated,  having  had  the  practical  training,  and  retaining 
many  of  the  pecuniary  interests  as  well  as  prejudices 
of  business  men,  as  did  Ricardo,  Cobden,  and  Bright ; 
or,  having  followed  the  life  of  a  soldier,  as  Col.  Torrens, 
or  of  a  lawyer  and  politician,  as  Lord  Lauderdale;  or 
being  occupied  as  government  clerks  as  were  James  Mill 
(a  licensed  preacher)  and  J.  S.  Mill  (most  peculiarly 
trained  by  his  father)  ;  and  even  when,  by  accident 
rather  than  by  design,  one  of  them  came  to  be  a  "pro- 


INTRODUCTION  ix 

fessor,"  he  had  been  educated  as  Malthus,  Jones,  and 
Whately  were,  for  the  church,  or  as  Nassau  Senior, 
Long^ield,  McCulloch,  and  Cairnes,  for  the  practice  of 
the  law. 

It  must  shake  the  preconceptions  of  many  readers  to 
compare  with  these  typical  examples  of  the  English 
economists  of  that  time,  the  American  economists  whose 
education  and  experience  are  carefully  described  in  the 
following  pages.  These  include  graduates  of  nearly  all 
the  leading  universities  or  colleges  of  that  time  in  Eng- 
land and  America — lawyers,  business  men,  mathema- 
ticians, natural  scientists,  philosophers,  men  of  wide 
travel  and  of  varied  experience  in  public  and  private 
affairs,  a  large  proportion  of  them  being  college  teachers. 
They  would  seem  to  have  been  quite  as  well — and  as  ill — 
fitted  as  were  their  English  contemporaries,  either  to 
give  a  sound  economic  interpretation  of  their  environ- 
ment or  to  deal  with  abstract  principles.  But  after  J.  S. 
Mill  had  won  for  Ricardian  economics  its  predominating 
place  in  American  thought,  that  system,  with  all  its 
unrecognized  limitations  of  time,  place,  and  logic,  became 
the  standard  of  economic  science  with  which  any  inde- 
pendent thought  upon  our  peculiar  problems  was  meas- 
ured and  found  wanting. 

The  time  was  not  ripe  for  a  re-examination  of  these 
opinions  until  the  new  era  of  criticism  dating  from  the 
Seventies  had  slowly  yielded  some  fruits  in  England  and 
America.  Partly  this  criticism  was  of  a  historical  nature 
and  tended  to  show  the  fallible,  temporary,  and  local 
character  of  the  Ricardian  economics.  That  too,  was 
seen  to  be  of  mortal  nature  like  American  economic 
opinion,  and  not  an  eternal  verity.  An  article  in  The 
Fortnightly  Review,  October,  1880,  by  Cliffe  Leslie,  who 
recognized  something  of  "perspicuity,"  novelty,  and  dis- 


X  THE    RICARDIAN    RENT    THEORY 

tinctiveness,  and  some  small  measure  of  relative  worth 
in  the  American  writings,  was  long  the  only  result  of 
this  impulse  so  far  as  it  concerns  the  present  subject. 
The  first  American  students  who  returned  from  Ger- 
many imbued  with  historical  teachings,  made  slight 
beginnings  at  a  re-examination  of  older  doctrines ;  but, 
in  most  cases,  their  historical  training  was  hardly  more 
than  a  veneer  over  the  groundwork  of  their  Ricardian 
opinions  earlier  acquired  at  home.  With  all  of  its  cul- 
tivation of  the  historical  sense  and  of  the  ideas  of  his- 
torical relativity  and  continuity  of  doctrine,  the  first 
generation  of  mature  economists  thus  trained  has  mostly 
been  content  to  see  these  principles  applied  in  explana- 
tion of  the  origin  of  the  rent  doctrine  in  England,  with- 
out apparently  permitting  its  faith  in  the  logical  com- 
pleteness of  that  doctrine  to  suffer  the  least  shock.  Mean- 
time, the  earlier  American  material  has  lain  almost  un- 
touched and  unworked.  It  was  with  this  need  and  oppor- 
tunity in  mind  that,  several  years  ago,  I  suggested  the 
subject  of  this  study  to  the  author. 

Partly  the  newer  criticism  has  been  of  an  analytical 
and  logical  character,  applying  new  and  more  rigid  tests 
to  old  doctrines.  It  began  with  Jevons,  Menger,  and 
Clark  (in  The  Philosophy  of  Wealth,  1884),  and  has 
been  continued  by  many  men  in  many  lands.  Probably 
nowhere  in  the  world  has  it  had  so  wide  and  deep  an 
influence  as  here  in  America.  In  all  the  flowering  of 
opinions  and  publications  in  the  field  of  theory,  there 
has  been,  to  be  sure,  a  tremendous  waste  of  blossom ; 
but  the  best  fruitage  is  a  small  group  of  younger  econo- 
mists with  better  critical  methods  of  study,  with  clearer 
economic  concepts  as  instruments  of  thought,  with  a 
more  consistent  scheme  of  terminology,  and  with  a  spirit 
of  scholarship  that  is  broader,  less  sectarian,  and  more 


INTRODUCTION  xi 

detached  from  temporary  interests  when  deaHng  with 
fundamental  principles. 

The  present  study  is  an  outcome  of  this  newer  criti- 
cism as  applied  to  the  earlier  economic  writings.  It  is 
far  from  a  full  and  perfect  fruition,  as  the  author  recog- 
nizes, but  it  contains  promise  of  larger  returns  in  the 
future.  The  task  undertaken  was  limited  to  one  theme, 
the  rent  doctrine  and  its  necessary  implications  in  the 
theory  of  population  and  in  the  law  of  diminishing  re- 
turns. The  author  has  pursued  his  task  with  diligence 
and  with  affectionate  interest  through  many  libraries, 
until  he  has  made  it  peculiarly  his  own.  Most  of  the 
writers  that  he  has  studied  had  pronounced  opinions  on 
the  political  issues  of  their  day;  but  the  reader  will  seek 
in  vain  for  any  trace  of  partisanship  in  the  following 
pages.  The  study  seems  to  have  been  made  with  an 
eye  single  to  the  interpretation  of  the  abstracter  economic 
doctrines  of  that  period,  and  the  author  knows  neither 
.Greek  nor  Trojan  as  respects  the  practical  interests  and 
influences  that  helped  to  shape  these  economic  doctrines. 
The  author  employs,  however,  as  instruments  of  analy- 
sis, certain  concepts  and  terms  found  in  the  recent  psy- 
chological economics ;  for,  without  a  new  point  of  view 
and  a  new  mode  of  attack,  it  would  have  been  vain  to 
take  up  the  study  of  these  discarded  materials.  One 
must  have  some  thread  in  hand  or  be  lost  in  the  maze 
of  confused  opinions. 

The  usual  effect  of  the  industrial  environment  upon 
the  economic  theory  of  that  period  in  America,  appears 
with  striking  clearness;  even  the  exceptions,  as  pre- 
sented by  Doctor  Turner,  are  instructive.  Few  of  the 
men  whose  opinions  are  reviewed  had  the  slightest  per- 
sonal connection  with  one  another ;  and  in  few  cases 
were  they  even  acquainted  with  one  another's  writings. 


xii  THE    RICARDIAN    RENT    THEORY 

Yet,  with  an  approach  to  unanimity,  they  came  to  the 
same  conclusion  on  the  population  question,  often,  it  is 
true,  by  reasoning  that  is  palpably  erroneous.  They 
denied,  with  almost  as  close  approach  to  unanimity,  the 
"orthodox"  contrast  between  land  and  capital  in  the 
sense  of  artificial  agents  (and  again  the  exceptions  are 
suggestive).  They  conceived  of  capital  in  terms  of 
value  in  relation  to  investment,  and  of  land  as  one  of 
the  kinds  of  material  agents  in  which  capital  was  in- 
vested. One  after  another,  independently,  various  writ- 
ers came  to  this  view,  usually  supposed  to  have  been 
original  with  Carey  and  to  have  been  confined  to  his 
school.  Many  of  them  held  to  this  idea  persistently, 
despite  the  influences  of  the  English  economic  writings 
which  were  almost  their  sole  literary  guidance.  These 
facts  throw  light,  not  less  upon  the  relativity  of  the 
English  than  of  the  American  economic  theory  of  that 
era. 

At  the  period  at  which  this  study  stops,  the  English 
classical  system  was  reasserting  its  influence  in  America, 
and,  in  the  alluring  form  which  J.  S.  Mill  gave  it,  was 
taking  its  dominating  place  in  American  collegiate  in- 
struction. There  it  continued  for  half  a  century — and 
still  in  some  measure  continues — to  exert  its  benumbing 
effects  upon  American  economic  thought.  Vigorous  new 
life-currents,  however,  began  to  stir  with  Francis  A. 
Walker's  dissent  from  the  wage  fund,  and  with  his 
stimulating,  though  inconclusive,  theory  of  profits.  Then 
in  turn  came  vital  impulses  of  one  kind  or  another  from 
more  recent  authorities.  A  recent  European  critic,  in 
a  review  of  this  active  intellectual  movement — a  review 
most  remarkable  in  its  range  and  grasp  of  and  insight 
into  the  literature — plainly  told  his  European  readers 
that  America  had  become  the  new  center  of  economic 
theory.  ^ 


INTRODUCTION  xiii 

Now  the  most  notable  impression  left  by  Doctor 
Turner's  study,  perhaps,  is  that  of  a  certain  likeness 
between  such  of  those  earlier  American  opinions  as 
were  not  mere  echoes  of  Ricardianism,  and  the  more 
recent  American  concepts  and  theories.  True,  it  will 
not  do  to  press  the  comparison  in  all  directions  and 
without  limits  (especially  since,  with  changed  conditions, 
the  population  doctrine  has  taken  on  a  new  form  differ- 
ing from  either  of  the  older  forms).  But  the  likeness 
appears  clear  in  the  recognition  of  the  conflict  between 
individual  and  social  interests  (denial  of  the  economic 
harmonies),  in  the  attitude  toward  the  theory  of  value, 
in  the  treatment  of  capital  as  an  investment  concept, 
and  in  the  rejection  of  the  twofold  classification  of  mate- 
rial factors  as  land  and  artificial  agents.  Perhaps  when 
some  Americans  recently  have  fondly  supposed  that  they 
were  discovering  novel  and  original  conceptions,  they 
were  but  beginning  to  regain  a  little  of  that  independ- 
ence of  mind  which  once  enabled  the  American  econo- 
mists in  their  theorizing  to  look  past  conventional  ideas 
and  to  catch,  now  and  then,  glimpses  of  the  world  of 
reality  about  them. 

It  would,  however,  be  a  reproach  to  this  generation 
if,  with  a  superior  equipment,  it  did  not  attain  to  some- 
thing more  nearly  ultimate  in  principles  than  did  our 
more  or  less  empirical  forebears.  Progress  is  not  to  be 
made  by  ignoring  former  opinions  whether  English  or 
American,  but  by  more  thoroughly  appreciating  the 
truth  and  error  in  them  when  studying  them  with  a  new 
critical  spirit,  by  the  aid  of  recent  biology  and  psychol- 
ogy,  and  in  the  light  of  the  rich  economic  experience 
of  the  hundred  years  between  1815  and  1915.  Doctor 
Turner's  study  fittingly  appears  after  a  century  of  the 

*J.  Schumpeter,  in  Jahrbuch  fur  Gesetzgehung,  etc.,  1910,  913. 


xiv  THE    RICARDIAN    RENT    THEORY 

Ricardian  rent  doctrine.  As  pioneer  work  in  a  part  of 
an  almost  untouched  field,  it  will  be  helpful  to  every 
economic  student  seriously  striving  to  know  "the  God 
of  things  as  they  are." 

F.  A.  F. 
Princeton  University. 


AUTHOR'S    PREFACE 

STUDENTS  of  the  history  of  economic  thought 
have  inexcusably  neglected  the  early  American 
economists.  This  neglect  was  a  subject  of  fre- 
quent comment  in  the  seminar  of  the  professor  under 
whom  I  majored,  Dr.  Frank  A.  Fetter.  He  encouraged 
me  to  make  a  study  of  their  works,  calling  particular 
attention  to  their  attitude  toward  Ricardian  rent.  Fol- 
lowing this  suggestion,  I  read  the  life  and  works  of 
these  economists.  I  found  them  worthy,  but  without 
fame.  I  believed  then,  and  now  know,  that  no  sys- 
tematic study  has  been  made  of  their  contributions.  It 
is  hoped  that  this  essay,  at  least  in  part,  may  serve  to 
reveal  their  merit  to  public  attention.  Although  I  was 
inadequately  prepared  for  the  task,  this  study  was  begun 
and  completed  while  I  was  a  graduate  student.  It  is 
offered  for  publication  precisely  as  when  completed,  now 
eight  years  ago,  with  the  exception  that  a  tedious  sixty- 
page  critique  of  Ricardo's  rent  doctrine  for  the  most 
part  is  omitted. 

When  the  study  was  begun,  I  was  fresh  from  a  perusal 
of  the  writings  of  the  late  General  Francis  A.  Walker, 
in  which  the  reader  was  taught  to  believe  that  he  who 
differs  from  Ricardo's  rent  "simply  does  not  know  what 
he  is  mouthing  about."  This  faith  was  upset,  however, 
while  reading  the  works  of  that  keen  witted  philosopher, 
economist,  and  statesman,  George  Tucker  of  Virginia. 
The  new  faith  received  from  Tucker  caused  me  to  do 
battle  against  Ricardo,  but  my  present  judgment  causes 
me  to  eliminate  the  greater  part  of  this  critique ;  for, 
while  interesting  to  the  author,  it  would  prove  tiresome 
for  the  reader. 


xvi  THE    RICARDIAN    RENT    THEORY 

The  purpose  of  presenting  Ricardo's  views  in  the 
beginning  of  the  study  is  that  they  form  a  basis  for  the 
controversial  arguments  presented  by  the  economists  we 
shall  study.  To  this  end,  a  critical  estimate  of  the  essen- 
tial features  of  the  theory  will  reveal  its  elements  of 
strength  and  weakness,  and  will  prepare  the  reader  for 
a  more  analytical  study  of  its  content.  The  logician 
would  doubtless  know  the  theory  first  and  hear  the  criti- 
cism last :  the  pedagogue  would  find  it  both  helpful  and 
interesting  not  to  defer  the  criticism  in  order  to  open  up 
the  question  by  setting  forth  the  essential  issues  involved. 

J.  R.  T. 

New  York  University, 
May,  192 1. 


CONTENTS 

Introduction  by  Frank  Albert  Fetter vii-xiv 

Author's  Preface xv-xvi 

CHAPTER    I 

INTRODUCTION:     CRITIQUE     OF     THE     RICARDIAN. 

RENT 

English  economics  deduced  from  experience  during  war — 
American  economics  different  from  English — Mal-adjustment  of 
productive  factors — Ricardo's  theory  of  value — Capital — Capital 
used  in  two  senses — Rent  not  a  cost — Proportionality — Capital- 
ization— The  differential  concept — Ricardo's  statement  of  the 
law  of  diminishing  returns — Extension  of  the  law  of  diminish- 
ing returns — Ricardo's  confused  definition  of  rent — Rent  a  trans- 
fer of  value — Rent  a  monopoly  return — Rent  an  addition  to 
national  wealth — Relation  of  rent  and  tariff 3 

CHAPTER    II 

THE    EARLY    NATIONAL    ECONOMISTS:    RAYMOND, 
EVERETT,    AND    PHILLIPS 

Raymond — Life — A  national  economist — Fundamental  econom- 
ic concepts— Theory  of  population  and  criticism  of  Malthus — 
Rent  obeys  the  law  of  supply  and  demand — Land  is  capital — 
Teaches  historical  increasing  returns. 

Everett — Life — A  national  economist — Opponent  of  Malthus 
— The  "new  idea" — Teaches  historical  increasing  returns. 

Phillips — Life — A  national  economist — Fundamental  economic 
concepts — Upholds  Gray's  theory  of  population — Criticism  of 
Ricardo's  rent — Ricardo's  one-cause  method  and  Phillip's  prac- 
tical method  contrasted — Rent — Teaches  historical  increasing 
returns — Indebted  to  Dr.  Franklin. 

Other  early  national  economists :  Due,  Vail,  Potter,  Opdyke, 
Mathew  Carey,  Ware,   Rae,  and   Colton 22 

CHAPTER    III 

CLASSICAL      ECONOMISTS:        McVICKAR,      COOPER, 
NEWMAN,    WAYLAND,    AND    VETHAKE 

These  writers  were  professors — Environment. 
McVickar — Life  and  writing — Upheld  McCulloch. 


xviii  THE   RICARDIAN   RENT   THEORY 

Cooper — Life  and  writings — Influence  in  the  South — Answers 
Everett  and  defends  Mahhus — Rent  a  restatement  of  Ricardo. 

Newman — Life  and  writings — Follows  in  the  lead  of  Adam 
Smith. 

Wayland — Life  and  writings — Fundamental  economic  con- 
cepts— The  theory  of  population — Wage-fund  doctrine — Upholds 
Ricardian  rent. 

Vethakc — Life  and  writings — Wages — "Tendency"  and  theory 
of   population — Rent   and   the   theory   of   diminishing   returns. 

Marcius  Wilson   50 

CHAPTER   IV 
JACOB    NEWTON     CARDOZO 

Conflicting  biographical  references — An  editor — Theory  of 
population — Criticism  of  Ricardian  rent — Rent  and  historical  in- 
creasing returns  75 

CHAPTER    V 

GEORGE   TUCKER 

Life  and  writings — An  estimate  of  Ricardo — Fundamental  eco- 
nomic concepts — A  statistical  study  of  population — Density  of 
population  and  the  rate  of  increase  vary  inversely — Ricardo's 
theory  of  wages  criticized — Slavery  cannot  exist  in  an  advanced 
stage  of  society — Land  is  capital — Profits — Tucker  and  Malthus 
had  similar  ideas  on  rent — Summary  of  chief  arguments — Criti- 
cism of  Ricardian  rent — Rent  and  the  theory  of  limited  re- 
turns   83 

CHAPTER   VI 

HENRY    CHARLES    CAREY 

Environment,  career,  and  personal  characteristics — Arguments 
against  Malthusianism — Relationship  of  wealth,  utility,  capital, 
value,  and  cost  of  reproduction — Two  arguments  on  rent :  (a) 
Land  is  capital;  rents  grow  proportionately  less;  (b)  The  natural 
order  of  cultivation — Three  possible  interpretations  of  Carey 
on  returns — An  argument  by  the  writer  on  interrelationships 
in  the  problem  of  proportionality — Carey  and  Ricardo  on  returns 
— Conclusion    no 

CHAPTER   VII 

FRANCIS     BOWEN 

Life  and  writings — A  national  economist — Assumptions — 
Laisses  faire — Fundamental  economic  concepts — Theory  of  pop- 


CONTENTS  xix 

ulation  and   criticism   of   Malthus — Criticism   of  the   Ricardian 
theory  of  rent — Rent  and  historical  increasing  returns 143 

CHAPTER   VIII 

JOHN    BASCOM    AND    AMASA    WALKER 

Bascom — Life  and  writings — Theory  of  population — Rent — 
The  law  of  diminishing  returns  in  agriculture  and  increasing 
returns  in  manufactures. 

Walker — Life — Political  career — mercantile  career — Objects  to 
Malthusianism — Land  is  capital — Four  elements  of  rent:  (a) 
Location,  (b)  Difference  in  fertility,  (c)  Importations,  (d) 
Permanent  improvements— Differences  between  Walker  and 
Ricardo  on  rent 159 

CHAPTER    IX 

ARTHUR  L.   PERRY 

Life  and  writings — An  estimate  of  Perry — Fundamental  eco- 
nomic concepts — The  theory  of  population — Land  is  capital — 
Rent  and  the  law  of  historical  diminishing  returns 179 

CHAPTER    X 

RSiSUMe. 

Wealth — Value — Capital — Population — Rent  —  Proportionality 
191 

BIBLIOGRAPHY 

203 


THE     RICARDIAN     RENT     THEORY 
IN   EARLY   AMERICAN    ECONOMICS 


CHAPTER  I 

INTRODUCTION:    CRITIQUE    OF    RICARDIAN 

RENT 

A  WELL-ROUNDED  study  of  the  attitude  of 
American  economists  toward  the  Ricardian  the- 
ory of  rent  would  call  for  more  than  a  review 
of  the  expressions  made  by  these  economists;  it  would 
call  for  a  consideration  of  the  environment  which  was 
powerful  in  shaping  their  thought  as  well  as  for  a  deep 
appreciation  of  the  major  problems  confronting  them. 
Furthermore,  the  reader  would  profit  little  by  studying 
a  criticism  of  Ricardo's  teachings  unless  he  knew  what 
it  was  that  Ricardo  taught.  And  he  could  not  compre- 
hend Ricardo's  thought  unless  he  knew  the  industrial 
conditions  in  England  during  the  first  part  of  the  nine- 
teenth century,  for  indeed  it  was  from  these  conditions 
that  his  thought  grew. 

Fortunately,  however,  Edwin  Cannan  and  others  have 
made  familiar  the  circumstances  which  gave  rise  to  the 
Ricardian  teachings  on  over-population,  diminishing  re- 
turns, and  differential  land-rent.  Then  too,  the  differen- 
tial theory  of  rent  and  the  conclusions  deduced  there- 
from have  been  repeated  to  the  point  of  tiresomeness. 
The  language  in  which  this  theory  was  originally  couched 
is  familiar  to  every  economist ;  but  it  is  only  the  language 
that  is  familiar,  for  there  has  never  been  agreement  upon 
the  theory  itself. 

"The  early  nineteenth-century  English  economists  de- 
duced their  doctrines,  not  from  study  of  the  works  of 


4  THE    RICARDIAN    RENT    THEORY 

their  predecessors,  but   from  the  actual  experience  of 
England  during  the  war."  ^    The  history  of  this  experi- 
ence, as  above  indicated,  has  been  told  so  frequently  by 
others  that  I  shall  not  repeat  it  here.    It  was  the  nature 
of   this  experience  that  gave  the  temper  and  tone  to 
the  writings  of  the  British  economists.    But,  on  this  side 
of  the  water,  it  was  an  entirely  different  type  of  experi- 
ence that  gave  rise  to  an  entirely  different  type  of  eco- 
nomic thought.    American  writers  regarded  the  Maltho- 
Ricardian  theory  as  an  enemy  of  progress,  and  held  it 
in  contempt  as  a  doctrine  that  would  hail  a  famine  as  a 
deliverer  and  celebrate  a  pestilence  as  an  occasion  for 
a  thanksgiving.     The  outlook  of  American  economists 
was  aggressive,  versatile,  and  optimistic.     No  class  was 
over-rich,   nor   was   any   class   miserably  poor.     Novel 
conditions,    both    political    and    physical,    were    ours. 
Charged  with  the  mission  of  subduing  a  new   world, 
separated  from  the  troubles  of  the  old  world  by  two 
oceans,  and  possessed  of  a  new  form  of  government, 
we  had  unique  problems  to  face.     If  our  development 
of  economic  thought  was  less  rapid  than  that  of  the 
English,  there  is  little  wonder;  for  why  should  Ameri- 
cans strive  to  develop  a  science  for  the  correction  of  ills 
that  hardly  existed?    Industrial  ills  furnished  the  motive 
for   economic   development   in   England:   the   insatiable 
desire  for  the  increased  production  of  wealth  furnished 
the   motive    for   economic    development   in   the   United 
States.    Following  these  motives,  it  was  but  natural  that 
reckonings  on  distribution  should  occupy  a  paramount 
place  in  the  writings  of  the  English.    Likewise  we  should 
expect  an  economy  of  prosperity  to  be  uppermost  in 
American  thought. 

*  Caiman,  Theories  of  Production  and  Distribution,  148. 


CRITIQUE   OF    RICARDIAN    RENT  5 

Furthermore,  our  institutions  of  learning  neglected 
the  development  of  this  science.  In  our  seminaries  and 
colleges,  excessive  importance  was  given  to  the  classics 
while  little  or  no  attention  was  given  to  the  subject  of 
political  economy.  The  study  of  constitutional  law  and 
the  interpretation  of  written  instruments  engaged  the 
attention  of  public  men.  In  the  early  part  of  the  period 
we  are  to  review,  the  currency  and  the  tariff,  and  in 
the  latter  part,  the  anti-slavery  agitation,  absorbed  pub- 
lic interest.  The  currency  and  the  tariff  became  party 
issues,  and  were  argued  thru  upon  a  political  rather 
than  upon  an  economic  basis.  The  anti-slavery  agitation 
produced  its  group  of  moralists,  but  none  of  these  dis- 
putes developed  economists. 

The  English  people  were  forced  to  conserve  their 
natural  resources.  But  it  was  literally  true  that,  for 
Americans,  to  be  saving  of  land  and  resources  would  be 
wasteful.  We  had  an  unbounded  potential  productivity 
in  uncultivated  lands,  an  untold  supply  of  minerals  and 
ores,  millions  of  horse  power  in  the  form  of  unharnessed 
waterfalls,  timber  so  plenteous  that  our  people  regarded 
trees  as  weeds,  and  innumerable  other  resources  so 
abundant  as  to  be  termed  free  goods.  At  the  same  time, 
labor  was  so  scarce  and  valuable  that  it  could  be  eco- 
nomically employed  only  in  those  places  where  the  re- 
turns would  be  largest.  Not  the  conservation  of  natural 
resources,  but  the  most  effective  utilization  of  labor, 
was  the  dictate  of  wisdom  in  this  country. 

There  was  a  mal-adjustment  in  the  productive  capac- 
ity of  England  in  which  natural  resources  was  the  short 
factor,  whereas  over-population  made  labor  the  long 
factor.  This  naturally  led  to  low  wages  and  high  land- 
rents.  In  America,  there  was  a  mal-adjustment  of 
productive  capacity  quite  different  from  that  found  in 


^ 


6  THE    RICARDIAN    RENT    THEORY 

England.  Here  labor  was  the  short,  and  natural  re- 
sources were  the  long  factor.  Naturally  enough,  land- 
rents  were  of  little  consequence,  whereas  wages  were 
high  and  the  labor  problem  was  one  of  major  importance. 

These  differences  in  environment  will  in  part  explain 
the  reasons  for  the  different  theories  of  rent  held  in 
the  two  countries.  But,  in  further  explanation  of  the 
variety  of  opinions  contrary  to  Ricardo,  we  must  look 
into  his  own  theory  of  rent.  I  shall  present  this  theory 
in  critical  form  in  order  that  the  reader  may  have  the 
essential  points  of  controversy  in  mind.  To  comprehend 
the  reasons  for  disagreement  with  Ricardian  rent  will 
best  prepare  the  way  for  a  study  of  the  early  American 
economists,  for  chief  among  their  tasks  was  to  defame 
the  doctrine  which  made  Ricardo  famous. 

Ricardo  approached  the  rent  problem  through  a  study 
of  value.  His  view  of  the  subject  is  familiarly  expressed 
as  "the  labor-cost-of-production  theory  of  value."  He 
taught  that  the  value  of  a  good  is  proportional  to  the 
amount  of  labor  employed  in  its  production  or  to  the 
wages  paid  for  that  labor.  If  your  knife  costs  twodays^ 
labor  whereas  my  pen  costs  only  one,  it  should  follow 
that  your  knife  would  exchange  for  two  such  pens  as 
mine.  Value  :  value  : :  labor  cost  :  labor  cost.  H  the 
relative  values  of  articles  are  proportional  to  labor-costs 
or  wage-outlays,  it  is  a  mere  truism  that  no  other  costs, 
as  rents  or  hires,  can  enter  into  value.  If  one  accounts 
for  the  price  of  wheat  by  the  labor-cost  of  producing  it, 
one  is  forced  to  prove  that  other  outlays  as  rents  are, 
in  reality,  not  costs  at  all.  So  much  for  the  theory  which 
teaches  that  value  is  proportional  to  labor-cost  or  to  the 
wages  paid  for  that  labor.  - 

2  Rirardo's   critics   have   put.   certain    embarrassing   questions:       (1)    One 
finds  a  precious  stone  worth  $500.     Is  its  value  determined  by  its  labor- 


CRITIQUE   OF   RICARDIAN    RENT  7 

True  or  false,  this  theory  of  value  enabled  its  author 
so  to  classify  productive  agents  as  to  make  rent  a  sur- 
plus return  above  labor-cost.  The  entrepreneur  is  hard 
to  convince  that  wages  form  his  only  cost  of  doing 
business.  He  must  pay  for  materials  and  pay  numerous 
hires,  rents,  and  fees.  He  asks,  If  cost  determines  price, 
why  include  only  wage-costs  and  omit  others  of  equal 
importance  ?  Questions  of  this  nature  were  troublesome, 
and  forced  Ricardo  to  make  the  following  classification 
of  productive  agents : 

(a)  Land — so  defined  as  to  include  all  natural  agents. 

(b)  Capital — so  defined  as  to  include  all  artificial 
agents  produced  by  labor. 

(c)  Labor — human  effort,  be  it  mental  or  physical. 

According  to  the  foregoing  classification,  capital  con- 
sists of  productive  goods  made  by  human  labor.  In  other 
words,  "capital  is  canned  labor" — past  labor  having  taken 
the  form  of  present  goods.  Then,  interest  or  the  pay- 
ment for  capital  is  a  remuneration  for  past  labor.  Both 
wages  and  interest  are  thus  outlays  for  labor. 

To  this  point,  capital  has  been  made  to  consist  of 
productive  goods — of  tools,  instruments,  and  machines 
created  by  labor  and  used  to  produce  more  wealth.  Here 
again  the  Ricardian  is  in  difficulty.  The  rent  paid  to 
the  landlord  is  called  a  surplus  gained  without  labor  ; 
yet,  when  he  reinvests  it  in  the  form  of  capital,  he  is 
forced  to  define  it  as  the  product  of  labor. 

cost?  No,  for  it  has  no  such  cost.  (2)  A  monopoly  artificially  raises 
the  price  of  a  good.  How  is  lahor-cost  responsible  for  the  rise?  The 
answer  is,  in  no  sense.  (,3)  Does  the  value  of  money  depend  upon 
its  labor-cost?  Ricardo  himself  answered  in  the  negative.  (4)  Wine 
becomes  better  and  sells  for  a  higher  price  when  allowed  to  age  for 
a  number  of  years.  A  sprout  worth  fifty  cents  grows  through  time  into 
a  tree  worth  a  hundred  dollars.  What  has  labor-cost  to  do  with  the 
increase  of  prices  caused  by  growth  or  improvement  through  time? 
Labor-cost  advocates  regard  these  as  mere  exceptions  to  the  "true  theory." 
(5)  How  account  for  the  value  of  labor  itself?  Another  exception.  (6) 
And  does  labor-cost  determ-ine  the  value  of  land,  minerals,  and  other 
natural  products  ?     Again,  no. 


r 


8  THE    RICARDIAN    RENT    THEORY 

Ricardo  employed  two  meanings  of  capital :  capital  as 
tools,  and  capital  as  value.  It  is  necessary  to  his  argu- 
ment to  prove  that  the  returns  on  capital  are  uniform,  in 
order  that  no  surplus  may  arise  from  it.  To  prove  that 
the  per  cent  of  return  is  uniform  for  all  capital,  he  is 
forced  to  abandon  the  idea  of  capital  as  tools  and  shift 
to  tlie  idea  of  capital  as  value.  If  capital  is  conceived  as 
value,  competition  will  operate  to  maintain  uniformity  of 
returns.  It  is  well  known,  for  example,  that  if  ten  per 
cent  is  returned  in  the  shoe  business  and  only  five  per 
cent  in  the  hat  business,  capital  will  shift  from  the  less 
to  the  more  remunerative  employment.  Because  capital 
tends  toward  a  uniform  competitive  return,  it  earns  no 
surplus.  No  surplus  going  to  capital  (canned  labor), 
Ricardo  tells  us  that  all  the  interest  on  capital  is  a  true 
labor-cost. 

The  foregoing  classification  enabled  him  to  treat  rent 
as  a  surplus  that  forms  no  part  of  the  cost  of  produc- 
tion. The  entrepreneur  spends  money  for  labor,  for 
agents  created  by  labor,  and  for  natural  agents.  But 
Ricardo  tells  us  that  cost  determines  value,  and  that  the 
only  cost  is  labor;  therefore,  the  money  paid  for  the  use 
of  natural  agents  must  be  eliminated  from  cost.  Call 
interest  the  wages  of  past  labor,  and  wages  the  payment 
for  present  labor ;  but  the  payment  for  the  use  of  natural 
agents  can  not  be  termed  wages  since  labor  did  not 
create  such  agents.  He  defined  rent  as  the  payment  for 
the  use  of  land  (natural  agents).  He  believed  rent  to 
be  no  part  of  cost;  thought  that  it  was  a  surplus  over 
and  above  cost.  If  it  is  not  an  element  of  cost,  it  can 
have  no  bearing  on  price.  How  did  he  proceed  to  dem- 
onstrate the  proposition  that  rent  is  not  a  cost  ? 

If  the  different  bushels  of  a  supply  of  wheat  are  of 
uniform  grade,  they  will  sell  for  a  uniform  price  in  the 


CRITIQUE   OF   RICARDIAN    RENT  9 

market.  Like  bushels  of  wheat  in  a  market  at  a  given 
time  will  sell  at  the  same  price.  But  the  cost  of  pro- 
ducing the  different  bushels  is  not  the  same.  Some  may 
be  produced  on  superior  soil  and  near  the  market;  some 
may  be  grown  on  inferior  soil  and  distant  from  the 
market;  some  are  secured  from  the  superior  uses  of 
land  and  others  at  or  near  the  intensive  margin.  Costs 
vary,  but  the  price  is  uniform.  Which  cost  is  it  that 
determines  the  price?  The  greatest  cost — that  portion 
of  the  supply  which  is  produced  at  the  greatest  cost — 
determines  the  price  of  every  portion  of  the  supply. 
But  the  greatest  cost  is  at  the  intensive  margin  or  upon 
the  marginal  land — the  land  barely  worth  cultivating. 
Such  land,  or  land  uses,  is  so  inferior  that  no  rent  is 
paid  for  the  use  of  it.  Then  if  production  at  the  greatest 
cost  determines  prices,  and  if  this  greatest  cost  takes 
place  where  no  rent  is  paid,  it  must  follow  that  rent 
does  not  enter  into  the  cost  that  determines  price.  This 
thought  was  cogently  expressed  by  Ricardo,  "Corn  is  not 
high  because  a  rent  is  paid,  but  a  rent  is  paid  because 
corn  is  high." 

Ricardo's  theory  of  value,  which  required  capital  to 
be  defined  as  "stored  up  labor,"  has  been  on  the  defensive 
from  the  moment  it  was  first  penned.  His  theory  of 
rent,  his  distinction  between  land  and  capital,  and  his 
theory  of  distribution  based  upon  this  artificial  distinc- 
tion, are  the  defense  works  of  his  labor-cost  theory  of 
value. 

As  above  indicated,  Ricardo  reached  the  conclusion 
that  "rent  does  not  enter  into  price."  This  conclusion 
together  with  his  concept  of  uniform  profits  (wages 
for  past  labor)  made  it  possible  for  him  to  deduce  the 
proposition  that  the  only  true  cost  and  determinant  of 
values  is  that  of  labor  employed. at  the  margin  of  culti- 
vation where  no  rent  is  paid. 


lO  THE    RICARDIAN    RENT    THEORY 

Should  it  be  demonstrated  that  rent  does  enter  into 
cost,  Ricardo's  theory  of  distribution  must  fall.  This 
demonstration  is  made  if  it  can  be  shown  that  only- 
valuable  land  (or  land  uses)  is  cultivated;  for  valuable 
land  always  commands  a  rent  and,  therefore,  rent  would 
enter  into  cost. 

Cultivation  extends  to,  but  not  beyond  the  "no-rent 
margin."  Let  us  examine  this  statement;  for,  if  it  is 
true,  it  follows  that  only  valuable  land  is  cultivated. 
What  is  this  margin?  It  is,  in  pure  theory,  a  boundary 
line  separating  the  land  fit  (valuable)  for  cultivation 
from  the  unfit  (valueless).  It  is  comparable  to  thS.lihe. 
separating  time  into  past  and  future.  ,  n 

Beyond  this  land-margin,  cultivation  would  occasion 
greater  costs  than  income.  Were  the  product  of  uses 
beyond  the  margin  greater  than  the  cost  of  harnessing 
them,  they  would,  in  consequence,  yield  a  net  return. 
They  would  be  valuable,  and,  for  this  reason,  command 
a  rent.  But  this  is  contrary  to  the  marginal  concept. 
This  thought  is  substantiated  by  two  laws :  proportional- 
ity and  capitalization. 

The  concept  of  proportionality  has  been  the  subject- 
matter  of  numerous  contributions  during  the  last  thirty 
years;  it  has  now  passed  out  of  the  theoretical  stage, 
and  has  become  an  established  economic  law.  Its  fa- 
miliarity to  economists  spreads  the  need  of  repeating  it 
in  full. 

A  single  agent  is  non-productive,  and  is  valueless 
unless  there  are  other  factors  to  combine  with  it.  An 
axe  cannot  cut  wood,  neither  can  a  man — it  takes  the 
two  combined,  for  the  mutual  interaction  of  agents  lib- 
erates each  the  productive  power  in  the  other.  Arid 
land  produces  nothing,  and  is  valueless  unless  water  is 
in  prospect.     Turn   a  river  into  the  barren  area,   and 


CRITIQUE   OF   RICARDIAN    RENT  n 

the  combination,  land  and  water,  becomes  productive 
and  valuable.  Since  neither  factor  alone  could  produce 
and  because  it  requires  mutual  contact  for  each  factor 
to  liberate  the  productive  capacity  in  the  other,  it  fol- 
lows that  the  productive  agent  is  a  composite  in  nature 
and  valued  as  a  single  unit.  Does  land  make  the  water 
valuable?  or  does  water  make  the  land  valuable?  Each 
liberates  the  productive  capacity  in  the  other,  and  the 
two  in  one  are  valued. 

Consider  a  rich  agricultural  state  like  Minnesota  with 
its  many  lakes  and  rivers.  Is  not  water  there,  although 
utilized  in  production,  a  free  good?  I  answer  that  water 
in  the  lakes  or  rivers  is  free  because  it  exists  in  such 
abundance  as  to  render  the  short  factor,  land,  incapable 
of  liberating  its  productive  capacity.  Suppose  now  it 
were  possible  for  the  owner  of  a  bonanza  farm  separ- 
ately to  sell  and  remove  the  moisture  from  his  farm. 
The  water  would  not  be  free,  but  it  would  require  the 
total  value  of  the  farm  to  buy  it.  If  one  thinks  of  the 
air  as  a  separate  thing,  it  is  free;  but,  were  it  integrated 
with  the  chemical  qualities  of  the  soil,  the  farmer  would 
not  have  it  permanently  removed  for  a  price  less  than 
the  value  of  the  farm.  To  harness  a  free  agent  and 
make  it  an  integrated  part  of  a  composite  productive 
agent  is  to  make  it  valuable.  A  farm  is  more  than  land ; 
it  is  the  combined  productive  qualities  that  grow  a  crop. 

Thus  we  see  that  proportionality  is  a  physical  law 
having  to  do  with  so  adjusting  things  that  they,  in  obedi- 
ence to  natural  laws,  will  give  off  the  means  of  gratify- 
ing desires.  Man  makes  the  adjustments,  however;  and 
the  motive  by  which  he  is  directed  is  that  of  securing 
a  valuable  return.  No  effort  is  wasted  by  man  to  harness 
an  agent  that  is  without  promise  of  a  valuable  return. 
The  conclusion  follows  that,  except  for  miscalculation 


12  THE    RICARDIAN    RENT   THEORY 

and  poor  judgment,  all  cultivated  land  yields  a  net  re- 
turn, is  valuable,  and,  therefore,  commands  a  rent. 

The  writer  has  in  mind  an  investment  of  $100,000 
made  in  the  fruitless  attempt  to  convert  a  seemingly 
bottomless  swamp  into  productive  soil.  The  venture 
failed  and  the  money  was  lost  because  there  was  no 
productivity  in  the  situation  to  exploit.  A  composite 
agent  is  valueless  when  one  of  the  essential  factors  is 
unproductive.  Suppose  that  this  swamp  had  responded 
to  good  treatment,  that  the  composite  agent  (the  land, 
the  capital  expended  and  embodied  in  its  improvement, 
together  with  the  other  essential  factors)  had  produced 
an  annual  net  yield  of  $10,000.  This  capitalized  at  five 
per  cent  would  give  a  capital  value  of  $200,000.  This 
yield  could  not  be  subdivided  and  the  different  portions 
of  it  attributed  to  the  different  factors  in  the  composite 
agent.  Specific  productivity  is  not  a  generally  accepted /(/f 
theory.  One  can  no  more  attribute  the  value  of  the 
product  to  one  factor  in  the  composite  agent  than  he 
could  attribute  music  to  the  piano  exclusive  of  the  pian- 
ist, or  sound  to  the  clapper  exclusive  of  the  bell,  or 
walking  to  the  right  foot  exclusive  of  the  left.  But 
why  will  a  man  farm  except  for  a  yield?  And  if  yield 
there  be,  its  value  is  reflected,  without  exclusion,  to 
the  factors  which  compose  the  farm,  the  integrated 
agent  of  production.  The  process  of  capitalization  is 
such  as  to  make  all  land  under  cultivation  valuable,  and, 
therefore,  rent-bearing.  But  if  only  rent-bearing  land 
is  cultivated,  rent  must  enter  into  cost,  with  the  conse- 
quence that  the  labor-cost  theory  of  value  falls. 

We  shall  see,  later  on,  that  almost  all  of  the  Ameri- 
can economists  had  the  view  that  rent  enters  into  cost. 
With  this  thought  in  mind,  naturally  enough  they  could 
not  see  whv  a  tax  on  rent  could  not  be  shifted.     To 


CRITIQUE   OF   RICARDIAN    RENT  13 

recognize  rent  as  an  element  in  the  cost  of  production 
is  to  take  the  premise  from  under  Ricardo's  deduction 
of  a  non-shifting  land-tax. 

Throughout  the  following  pages,  we  shall  find  other 
difficulties  which  our  writers  encountered  in  their  criti- 
cism of  Ricardo.  Among  these,  i^  should  be  kept  in 
mind  that  Ricardo's  theory  of  rent  was  static,  vyhere^s 
American  economists  took  a  dynamir  point  of  viey. 
What  is  more,  Ricardo  approached  the  determination  of 
price  from  the  margin,  whereas  almost  all  American  r^ 
economists  thought  that  the  no-rent  margin  was  deter- 
mined by  the  price  of  the  product.  They  reasoned  that 
the  margin  is  price-determined  rather  than  price-deter- 
mining. 

Again  Ricardo's  well  known  formula  makes  differ- 
ences in  land  a  cause  of  rent ;  h^ut  the  principle  ^f  cap- 
italization  enables  us  to  argue  that  differ^^rp  \x]  -Fprtil- 
jty  is  not  a  cau^e.  but  only  a  measure  of  rent.  Rent 
in  the  competitive  market,  as  above  shown,  is  paid  for 
all  land  under  cultivation.  Moreover,  rents  come  to 
equality  in  the  sense  of  equal  price  for  equal  service. 
Paying  rent  is  but  buying  the  productive  services  of 
agents.  A  rent  of  $100  for  the  superior  acre  which 
yields  100  units  of  service,  is  equal  per  unit  of  service 
to  the  rent  of  $5  paid  for  the  inferior  acre  which  yields 
only  5  units  of  service.  These  rents  are  equal  in  the 
same  sense  that  the  price  of  5c  for  one  loaf  is  not  higher 
than  the  price  of  $1  for  twenty  loaves.  Competition 
renders  equal  land-uses  equal  in  price.  And  the  price 
paid  for  the  uses  of  land  is  as  much  a  cost  to  the  entre- 
preneur as  is  the  price  paid  for  the  services  of  labor. 
From  the  best  to  the  poorest  land,  rent  enters  uniformly 
into  cost. 

Regarding  capital  as  uniform,  Ricardo  limited  the  dif- 


14 


THE    RICARDIAN    RENT    THEORY 


ferential  concept  to  land.  We  shall  find  that  not  a  few 
of  the  writers  we  shall  study  made  a  severe  attack 
against  him  at  this  point.  At  a  later  date  than  we  shall 
review,  Francis  A.  Walker,  though  a  defender  of  Ricar- 
dian  rent,  recognized  differences  among  men,  and  made 
these  the  basis  for  his  theory  of  differential  profits. 
Recent  authors — notably  Hobsim^-Clark,  Cannan,  Fetter, 
and_  Davenport: — see  that  the  differential  idea  applies 
with  equal  force  to  the  artificial  agencies  of  production 
as  it  does  to  labor  and  land.  ^ 

Akin  to  his  differential  was  Ricardo's  treatment  of 
the  law  of  diminishing  returns,  which,  despite  its  im- 
perfections, was  a  real  contribution.  Turgot  had  nar- 
rowly conceived  this  law.  *  Cannan  believes  that  Malthus 
did  not  make  use  of  this  law  in  the  first  and  second 
editions  of  his  essay  on  population.  But,  I  ask,  is  not 
the  very  essence  of  the  orthodox  concept  of  diminish- 
ing returns  contained  in  Malthus'  arithmetical  and  geo- 
metrical ratios?  The  doctrine  of  the  pressure  of  popu- 
lation on  the  means  of  subsistence,  has  no  basis  if  it  is 
not  the  disadvantage  which  attends  the  attempt  to  extort 
a  greater  and  still  greater  crop  from  the  soil.  Ricardo 
himself  does  not  give  the  law  a  better  statement  than 
is  found  in  Sir  Edward  West's  Essay  on  the  Application 
of  Capital  to  Land  (1815).^  But  to  connect  this  law 
with  the  problems  of  rent,  profits,  and  wages,  and  to 
weave  it  into  a  general  system  of  distribution  was  left 
for  Ricardo.     The  recent  extension  of  this  law  to  other 

*  Walker,  Political  Econ.,  Part  IV,  chap.  IV.  Also  Hobson,  The  Law 
of  the  Three  Rents,  Quar.  Journ.  Econ.,  V,  263-288,  Apr.,  1891;  Clark, 
Distribution  as  Determined  by  a  Law  of  Rent,  Quar.  Journ,  Econ.,  V, 
289-318,  Apr.,  1891;  Cannan,  The  Origin  of  the  Law  of  Diminishing 
Returns.  Econ.  Jour.,  11,  53-69,  1892;  Fetter,  The  Passing  of  the 
Old  Rent  Concept,  Qu^ar.  Journ.  Econ.,  XV,  416-455,  May,  1901 ;  and 
Fetter,  The  Relation  Between  Rent  and  Interest,  Amer.  Econ.  Asa'n., 
1904,    third   serie.s,    176-198. 

*  Cannan.    Theon/  nf  Prnductioit   and   Di.ifrihiifion,   147-148. 

*  West,  Essay  on  the  Application  of  Capital  to  Land,  9-27. 


CRITIQUE   OF    RICARDIAN    RENT  15 

productive  factors,  though  the  method  of  reasoning  and 
the  definition  of  the  law  be  modified,  has  furthered  the 
work  which  Ricardo  began.  This  law,  to  Ricardo,  was 
a  principle  of  resistance;  and,  to  him,  cost  was  the  over- 
coming of  resistance.  This  principle  is  related  to  value 
since,  because  of  resistance,  supply  is  limited. 

Ricardo's  thought  was  that  land  obey<^  the  1a:w— of 
diminishing  returns  whergas_other_agents^  do  -iiat.  This 
statement,  it  should  be  said,  has  been  denied  for  the  most 
part  by  later  economists.  Almost  all  economists  now 
f^bfifT^p  that^  should  any  productive  a^ent  cease  to  obey 
th^  Ipw  ni  Hiipini';hin^  rptiirns,  if  >Ynuld  lose  the  element 

Qf_S£ar£ity-and  become  a  J[ reg.  ^ood. 

It  is  true  that,  in  the  beginning  of  his  work,  Ricardo 
doubly  emphasized  the  point  that  the  law  of  diminish- 
ing returns  is  associated  only  with  the  original  and  inde- 
structible qualities  of  the  soil.  ®  He  reckoned  as  capital 
all  the  investments  on  the  land  such  as  hedges,  fences, 
manure,  and  other  improvements.  But  Ricardo  himself 
was  led  to  give  up  a  classification  so  artificial  as  this. 
He  abandoned  the  classification  in  these  words :  "As  a 
part  of  this  capital,  when  once  expended  in  the  improve- 
ment of  a  farm,  is  inseparably  amalgamated  with  the 
land,  and  tends  to  increase  its  productive  powers,  the 
remuneration  paid  to  the  landlord  for  its  use  is  strictly 
of  the  nature  of  rent,  and  is  subject  to  all  the  laws  of 
rent."  ' 

Thus  we  see  that  Ricardo  himself  came  to  give  a 
more  extensive  application  to  the  law  of  rent  than  later 
writers  have  given  him  credit  for. 

The  different  points  of  view  found  throughout  Ri- 
cardo's  treatment  have  made  his  followers  uncertain  as 

'  Ricardo,  Principles,  46. 

''  See   foot-note,    Principles,   pages   246-247. 


l6  THE    RICARDIAN    RENT    THEORY 

to  what  Ricardo  meant  by  rent,  and  these  critics  have 
been  at  still  greater  variance  relative  to  the  conclusions 
deduced  from  his  definition.  ® 

His  formal  definition  reads :  "Rent  is  fh^{  pnrfinn 
pf  the  produce  of  the  earth,  which  is  paid  to  the  land- 
lord for  the  use  of  the  original  and  indestructible  powers 
pf  the  soil/'  ^  This  definition  is  based  upon  the  idea 
that  rent  is  a  contractual  payment  made  by  one  person 
to  another  for  the  use  of  the  land  as  such.  Again  he 
says,  "For  rent  is  always  the  difference  between  the 
produce  obtained  by  the  employment  of  two  equal  quan- 
tities of  capital  and  labor."  ^"  In  this  definition,  it  is 
not  certain  whether  rent  is  a  contractual  payment  or 
whether  it  might  not  be  the  produce  obtained  in  case 
the  landlord  tilled  his  own  soil.  Nor  are  we  sure  but 
that  rent  might  be  a  remuneration  for  the  use  of  capital 
and  of  labor. 

The  author  employs  many  expressions  which  would 
lead  us  to  believe  that  a  rent  is  paid  for  capital;  the 
following  is  illustrative :  "The  capital  last  employed  pays 
no  rent."  ^^ 

Chapter  11  of  his  Principles  is  devoted  to  rent;  and 
the  reader  cannot  be  mistaken  in  the  fact  that,  through- 
out that  chapter,  Ricardo  had  commodity-rent  rather 
than  money-rent  in  mind.  It  is  probable  that  the  im- 
poverished state  of  the  people  in  England  at  the  time 

*  Professor  Sidgwick  says,  "The  Ricardian  theory  of  rent  combines, 
in  a  somewhat  confusing  way,  at  least  three  distinct  theories,  resting 
on  different  kinds  of  evidence,  and  relating  to  different  and  not  necessar- 
ily connected  inquiries:  we  may  distinguish  them  as  (1)  a  historical 
theory  as  to  the  origin  of  rent,  (2)  a  statistical  theory  of  the  economic 
forces  tending  to  determine  rent  jat  the  present  time,  and  (3)  a  dynamical 
theory  of  the  causes  continually  tending  to  increase  rent,  as  wealth  and 
population  increase."  Principles  of  Political  Economy,  286.  Here  Pro- 
fessor Sidgwick  seems  to  have  mistaken  Ricardo's  description  of  rent 
for  his  theory  of  rent.  Views  like  Professor  Sidgwick's  are  continually 
appearing  in   the   economic  writings   we   are   to  review. 

*  Ricardo,  Principles,  44.  He  should  have  said  "uses  above  the  mar- 
gin."    The  powers  of  the  soil  are  not  indestructible. 

^"Ib.,  48.  "/&.,  49. 


CRITIQUE    OF   RICARDIAN    RENT  17 

when  Ricardo  prepared  this  chapter  is  responsible  for 
the  emphasis  which  he  placed  upon  commodity-returns 
and  corn-rent.  Later  on,  however,  when  he  was  prepar- 
ing his  Chapter  XXIV  {The  Doctrine  of  Adam  Smith 
Concerning  the  Rent  of  Land),  a  different  emphasis  was 
given  to  the  subject.  He  was  there  concerned  largely 
with  the  distribution  of  wealth.  Desiring  to  prove  that 
the^  interest  of  the  landlord  is  opposite  to  the  interest  of 
the  rest  of  the  community,  he  had-JxiJ<eep  uppermost_[n 
thought  the  idea  of  contract  rent  payable  in  terms  of 
money.  A  careful  reading  of  this  chapter,  however, 
shows  much  of  shifting  back  and  forth  between  the  ideas 
of  money-rent  and  corn-rent. 

When  he  reaches  Chapter  XXXII  {Mr.  Malthus' 
Opinions  on  Rent),  we  find  Ricardo  championing  the 
cause  of  the  people  against  the  forceful  arguments  of 
Malthus,  the  chief  defender  of  the  landlord  class.  This 
chapter  contains  a  reply  to  Malthus'  pamphlet  of  1815 
on  The  Nature  and  Progress  of  Rent.  Malthus  looked 
upon  rent  as  an  addition  to  national  wealth.  Ricardo 
could  overcome  this  point  of  view  only  by  treating  rent 
as  a  transfer  of  value  from  one  person  to  another.  And 
so  he  here  shapes  his  definition  to  fit  the  point  he  would 
make.  ^- 

Chapter  II  of  his  Political  Economy  contains  his  analy- 
sis of  rent;  Chapter  XXIV  on  Adam  Smith,  is  an  indict- 
ment of  the  landlord  class  showing  their  interests  to 
be  opposed  to  those  of  the  rest  of  the  community;  and 
the  chapter  on  Malthus,  Chapter  XXXII,  is  an  argu- 
ment to  overcome  the  champion  of  the  landlord  class. 
In  the  chapter  on  Rent,  we  find  Ricardo  the  scientist ; 
in  the  chapter  on  Malthus,  we  find  Ricardo  the  debater. 

"  Ricardo,  Principles,  393.  See  Letters  of  D.  Ricardo  to  H.  Tower, 
113-114. 


1 8  THE    RICARDIAN    RENT    THEORY 

It  was  necessary  for  him  to  shift  from  commodity- 
returns  to  money-rent  in  order  to  make  his  case  against 
the  landlord  class. 

The  students  of  Ricardo  furthermore  have  jiadjdiffi- 
culty  in  determining  whether  rent  is  to  be  regarded  as 
I  a  monopoly-return  or  a  competitive  return^  In  the  sec- 
I  ond  chapter  of  his  work,  it  is  clear  that  rent  is  an  out- 
(<.  '  growth  of  competitive  conditions.  But,  throughou_t_jhe 
V*  letter  part  of_his  study,  hfi  states^sjTgcifica11y_j2Tore  than 
once  that  rent  is  to  be  regarded^-as-a 4»onapoly-return./^* 
Ricardo's  definition  is  at  one  time  to  be  interpreted 
from  the  individual's  point  of  view,  at  another  time 
from  the  national  point  of  view ;  at  one  time  it  refers 
to  corn-rent,  and  another  time  to  money-rent;  at  one 
time  it  means  pure  land-rent,  at  another  time  mixed  cap- 
ital and  land-rent;  at  one  time  it  signifies  monopoly- 
returns,  and  at  another  time  competitive  returns.  It 
supplies  a  basis  for  such  a  variety  of  arguments  and 
conflicting  conclusions  that  we  cannot  wonder  why  hard- 
ly any  two  writers,  whether  they  be  disciples  or  oppo- 
nents, can  agree  on  the  Ricardian  theory  of  rent.  One 
f"^  disciple  of  Ricardo  claims,  in  harmony  with  some  of 
Ricardo's  teachings  on  rent,  that  the  progress  of  one 
class  means  the  poverty  of  another;^*  a  critic,  ^^  who 
even  styles  himself  the  "Ricardian  of  the  Ricardians," 
with  equal  fidelity  to  Ricardo  denies  this  doctrine  while 
basing  his  arguments  also  upon  the  Ricardian  theory  of 
rent.  The  truth  is  that  Ricardo  had  no  clear  conception 
of  rent,  and  that  he  shifted  from  one  concept  to  another 
as  it  became  convenient  in  the  different  parts  of  his 
study. 

Does  rent  add  to  the  wealth  of  a  nation?     Certainly 

"Ricardo,  Principles,  234,   235,  268. 
^*  George,  Progress  and  Poverty. 
^^  Walker,  Land  and  its  Rent. 


CRITIQUE    OF   RICARDIAN    RENT  19 

from  the  above  variations  in  view-point,  the  author  gives 
us  ground  for  drawing  a  choice  of  conclusions.  Note 
particularly  the  following  remarks:  "Rent  then  is  a 
creation  of  value,  but  not  a  creation  of  wealth;  it  adds 
nothing  to  the  resources  of  a  country,  it  does  not  enable 
it  to  maintain  fleets  and  armies;  for  the  country  would 
have  a  greater  disposable  fund  if  its  land  were  of  a  bet- 
ter quality,  and  it  could  employ  the  same  capital  without 
generating  a  rent."  '^  Certainly  the  conclusion  from  this 
would  be  that  rent  is  a  mere  transfer  of  value  which 
adds  nothing  to  national  wealth. 

If  we  turn  from  his  attack  upon  the  landlords  to  his 
comment  upon  the  niggardliness  of  nature,  his  thought 
is  upon  the  social  distress  and  upon  returns  of  product 
rather  than  of  value.  Here  he  remarks,  "Whether  thfe 
proprietor  of  the  land,  or  any  other  person,  cultivate 
No.  I,  these  ten  quarters  would  equally  constitute 
rent."^'^  Since  rent  is  composed  of  products,  and  pro- 
ducts are  wealth,  it  follows  that  rent  adds  to  national 
wealth.  This  distinction  is  very  important  in  that  the 
question  of  tariff  in  both  England  and  America  was 
largely  influenced  by  it. 

The  different  opinions  held  by  Ricardo  and  Malthus 
as  to  whether  or  not  rent  adds  to  the  national  wealth 
made  Malthus  a  protectionist  and  Ricardo  an  advocate 
of  the  freedom  of  international  trade. 

American  economists  have  placed  much  emphasis 
upon  the  relationship  between  rent  and  the  tariff ;  indeed, 
prior  to  1880,  American  economics  was  little  more  than 
a  by-product  of  considerations  on  the  tariff.  On  the 
whole,  protectionists  have  contested  the  Ricardian  rent- 
doctrine,  while  free  traders  have  accepted  it.  Profits 
was    Ricardo's    starting   point   in   his    argument   against 

"Ricardo,  Principles,  394.       " /b.,  48. 


20  THE    RICARDIAN    RENT    THEORY 

tariff,  and  his  one  rate  of  profits  was  determined  princi- 
pally by  agricultural  capital  which  usually  found  the 
most  unproductive  investment.  Restrict  foreign  corn, 
and  the  growth  of  population  will  force  the  cultivation 
of  land  at  lower  margins.  "  The  consequent  high  prices, 
he  thinks,  enable  the  landlord  class  to  reap  the  benefits 
of  high  rents  at  the  expense  of  wages  and  profits.  It 
has  been  said  that,  "Th£  Ricardian  theory  of  rent  was 
admirably  suited  and  was_meant_jor  the  practical  pur- 
gose^  of^  attacking_the  ConTL_I^VYS_and_ahQlishing_Jhe^ 
protective  duty  on  the  impojlation  of  corn."  ^^  Professor 
Cannan,  among  others,  is  inclined  to  this  view. 

According  to  Ricardo's  static  economics,  rent.is  large- 
1^  a  monopaly-return.  His  variety  of  definitions  of  rent 
may  be  classified  as  surplus  value,  surplus  produce,  and 
contract-rent.  Ricardo  was  primarily  interested  in 
profits ;  according  to  him,  rpnt^  anH  prryfits  move^rn  oppo- 
^site  diijectiQD5^^  Profits  and  the  land-margin  decline  to- 
gether; rents  and  prices  mount  higher  because  of  declin- 
ing profits  and  land-margins.  The  importation  of  corn 
would  maintain  higher  land-margins  and  higher  profits, 
but  lower  prices  and  lower  rents.  This  theory  seemed 
to  prove  that  the  interests  of  capitalists,  manufacturers, 
and  city  dwellers  were  contrary  to  the  interests  of  the 
landlords.  Non-agricultural  classes  would  profit  by  a 
removal  of  the  tariff;  landlords  would  suffer  by  a  re- 
moval of  the  tariff.  Here  Ricardo  seems  to  be  in  a 
dilemma ;  restrictions  on  corn  will  be  removed  or  they 
will  not  be  removed;  if  they  are  removed  the  landlord 
class  will  suffer,  if  they  are  not  removed  other  classes 
will  suffer.  In  any  case,  a  large  portion  of  the  popula- 
tion must  lose. 

It  took  two  shifts  in  thought  for  Ricardo  to  get  out 

"  Devas,   Political  Economy,  286. 


CRITIQUE   OF    RICARDIAN    RENT  21 

of  this  perplexity.  First,  he  shifted  from  the  welfare 
of  a  class  to  the  welfare  of  the  nation.  Second,  he 
shifted  his  definition  from  commodity-rent  to  money- 
rent.  By  reason  of  this  shift,  he  could  make  his  case 
against  the  landlord  class  and  substantiate  his  argument 
for  a  removal  of  the  tariff.  Of  the  items — money-in- 
come to  the  landlord,  money-outgo  of  the  farmer,  and 
produce  from  the  land — the  first  two  mutually  cancel, 
and  leave  the  third,  produce,  as  the  real  contribution  to 
the  sum  total  of  income. 


CHAPTER  II 

THE    EARLY    NATIONAL    ECONOMISTS- 
RAYMOND,  EVERETT,  AND  PHILLIPS 

THE  purpose  of  the  preceding  chapter  was  to 
prepare  the  way  for  a  study  of  the  early 
American  economists.  This  chapter  will  be- 
gin with  a  study  of  Daniel  Raymond  (1786-1849)  be- 
cause he  was  the  first  American  to  write  a  book  on 
political  economy.  ^  He  was  born  and  educated  in  Con- 
necticut. After  being  graduated  from  the  Tapping 
Reeve  School  of  Law  at  Litchfield,  Connecticut,  he 
moved  to  the  city  of  Baltimore  where  he  began  the 
practice  of  the  law  in  the  year  1814.  Throughout  his 
career,  Raymond  was  a  strong  opponent  of  slavery,  an 
able  nationalist,  a  scientific  protectionist,  and,  contrary 
to  the  then  prevailing  American  ideas,  he  opposed  "lais- 
sez  faire"  in  the  broad  sense  of  that  term.  H.  J.  Furber 
says  that  Raymond  had  the  dislike  for  England  which 
was  so  common  in  this  country  at  that  time.  ~  Cossa 
goes  so  far  as  to  claim  that  Raymond's  works  were  partly 
inspired  by  his  animosity  against  England.  But  this  is 
a  mere  statement  devoid  of  proof;  for,  indeed,  there 
is  nothing  in  Raymond's  writings  to  warrant  it. 

1  TJioufihts  on  Political  Economy.  In  two  parts.  Baltimore,  1820. 
The  second  edition  was  titled  The  Elements  of  Political  Economy.  Tn 
two  parts.  Baltimore,  1S23.  He  put  forth  a  third  edition  in  1836, 
and  a  foTirth  editioji  in  1840.  The  work  received  much  unfavorable 
criticism;  cf.  T>r.  C.  V.  Gray,  Xorth  Aiuerican  Rrrifv.  April  1821; 
The  Richmond  Inqtnrer.  Richmond,  Va.,  in  the  following  issues  of  182.^), 
July  1,  Aupust  26,  30,  September  6,  9,  October  13,  and  December  6. 
In  these  articles.  W.  G.  Giles  is  most  unfair,  inacciirate  in  quotation, 
and  abusive.  He  tries  to  make  Raymond  out  a  fanatic.  He  would 
convey  the  impression  that  the  book  is  partisan.  Expressions  like  "Messrs. 
Daniel  Raymond,  John  Quincy  Adams,  and  Henry  Clay  as  an  Affiliated 
Triumvirate    in    the    elements    of    Political    Economy,"    are    characteristic. 


DANIEL    RAYMOND  23 

At  the  time  Raymond  wrote  his  book  (1820),  several 
European  texts  were  in  use  on  this  side  of  the  Atlantic. 
No  particular  interest  was  taken  in  the  fundamental 
laws  of  political  economy;  yet  these  works  were  exten- 
sively read  for  their  bearing  on  the  paramount  political 
issue  of  the  time — the  tariff  problem.  Both  political  and 
industrial  conditions  forced  this  problem  to  the  fore. 

Raymond's  interest  in  the  tariff  determined  the  nature 
of  his  book,  which  was  a  thoughtful  presentation  of 
the  subtler  principles  of  protective  duties  in  opposition 
to  the  economic  theories  developed  in  England.  He 
taught  that  national  productive  capacity  results  from 
the  harmonious  development  of  agriculture  and  manu- 
facture. This  proposition  and  its  development  was  Ray- 
mond's contribution.  His  concept  of  "capacity,"  to- 
gether with  his  definition  and  development  of  the  idea, 
differed  materially  from  that  of  James  Steuart  and  of 
Lord  Lauderdale.  We  are  spared  the  need  of  contro- 
verting M.  E.  Hirst's  claim  to  the  contrary.  ^     He  gave 

I  cannot  agree  with  the  opinion  of  A.  L.  Perry  that  Raymond  is  a 
follower  of  Adam  Smith  (Political  Economy,  81).  C.  P.  Neill's  "Daniel 
Raymond"  is  the  only  reliable  work  on  Raymond.  Mr.  Neill's  study  is 
confined  largely  to  Raymond's  main  thesis.  He  gives  no  discussion  on 
rent,  which  was  only  incidentally  considered  by  Raymond.  See  Neill's 
Chap.  II.  "Daniel  Raymond  and  His  Work."  In  Chapter  IV,  Mr. 
Neill  quotes  in  parallel  columns  from  Raymond's  book  and  from  F.  List's 
works  which  appeared  several  years  later.  It  seems  quite  evident  that 
List  was  indebted  to  Raymond.  This  throws  some  light  on  the  erroneous 
contention  that  H.  C.  Carey  was  indebted  to  List  on  the  question  of 
protection.  Both  Carey  and  List  were  indebted  to  the  same  American 
sources  on  this  question.  Raymond's  work  had  a  few  enthusiastic  friends; 
NUes'  Register,  December  16,  1820;  Blackwood's  Magazine,  XVII,  200. 
John  Adams  and  Mathew  Carey  waxed  enthusiastic  over  the  work  (Neill's 
chapter  II).  General  characteristics  of  Raymond's  work  were:  as  a 
national  economy,  political  and  economic  entities  were  considered  co- 
extensive ;  individualistic  philosophy  was  opposed ;  legal  and  moral  con- 
siderations overshadowed  economic  principes.  His  was  a  political  econ- 
omy. His  main  thesis  was  national  wealth  as  capacity  for  production 
in  opposition  to  individual  wealth  as  the  possession  of  commodities.  The 
purpose  of  his  work  was  "to  break  loose  from  the  fetters  of  foreign 
authority;  from  foreign  theories  and  systems  of  political  economy,  which 
from  the  dissimilarity  in  the  nature  of  the  governments,  renders  them 
altogether  unsuited  to  our  country."  {Political  Economy,  first  ed.,  pref., 
v-vi.) 

^  Furber,   Geschichte  der  Oekonomischcn  Theorien  in  Amerika,  58. 

3  Hirst,   The  Life   of  Friedrich  List,  112. 


24  THE    RICARDIAN    RENT    THEORY 

little  attention  to  a  theory  of  distribution,  for  his  primary 
interest  was  in  the  development  of  an  economics  of  pros- 
perity which  looked  toward  the  development  of  our 
national  productive  capacity.  Unbounded  resources  were 
ours,  and  he  viewed  protection  as  the  agency  for  the 
development  of  manufactures. 

Our  people  had  too  recently  won  their  independence 
from  the  exploitation  of  the  English  government  for 
an  idea  of  strong  centralization  and  governmental  inter- 
ference, such  as  he  advocated,  to  meet  with  general  ap- 
proval. His  condemnation  of  slavery  was  not  short  of 
insulting  to  a  large  section  of  the  country.  His  work 
had  few  friends  and  a  small  sale. 

Raymond,  as  above  indicated,  recognized  the  nation 
as  an  organic  unit.  He  objected  to  Adam  Smith's  indi- 
vidualistic economy,  and  insisted  that  the  interests  of 
individuals  or  classes  were  often  opposed  to  the  national 
interest.  In  his  thought,  it  is  capacity  for  acquiring  the 
necessities  and  conveniences  of  life,  and  not  existing 
commodities,  which  constitute  the  real  wealth  of  a 
nation.  *  The  province  of  political  economy  is  not,  he 
thinks,  to  study  how  individual  classes  may  secure  or 
augment  v/ealth  and  value.  ^  The  field  of  political  econ- 
omy is,  according  to  him,  confined  to  a  study  of  how 
the  greatest  productivity  of  a  nation  may  be  secured 
through  legislation.  *^     Naturally,  then,  this  writer  gave 

*  Raymond,  Political  Economy,  4th  ed.,  81.  Raymond's  ideas  of  na- 
tional restriction  struck  a  sympathetic  chord  in  Mathew  Carey,  which 
is  evidenced  by  the  fact  that  he  wanted  to  endow  a  chair  of  political 
economy  in  the  University  of  Maryland  on  condition  that  Raymond  be 
allowed  to  fill  it: 

"Philadelphia,  Jan.  12,  1822.  Know  all  men  by  these  presents,  that 
I  do  hereby  bind  myself  to  pay  the  University  of  Maryland,  the  sum  of 
500  dollars,  as  one  year's  salary  for  a  Professor  of  Political  Economy, 
and  also  to  continue  the  subscription,  unless  I  shall  give  six  months' 
previous  notice  of  my  determination  to  discontinue  the  same.  (signed) 
Mathew  Carey."  Biographical  Sketches,  93-94.  The  very  interesting 
correspondence  between  Raj-mond  and  Carey  regarding  the  professorship 
in   question   will   be    foxind   in   the    Biographical  iSketches,   94-96. 

5/6.,  84.      •/&.,  116. 


DANIEL    RAYMOND  25 

little  attention  to  the  laws  which  govern  the  distribution 
of  income.  There  were  four  editions  of  his  work;  the 
first  and  fourth  editions  gave  no  discussion  of  rent, 
wages,  profits,  and  interest.  Despite  this  he  made  a  bold 
stand  against  the  Maltho-Ricardian  doctrine. 

Raymond's  positive  views  were  briefly  expressed  on 
the  population-rent  problem.  He  said,  "Malthus'  theory 
of  population  is  certainly  ingenious  and  plausible,  al- 
though it  is  calculated  to  leave  very  erroneous  impres- 
sions on  the  mind  of  the  reader,  in  consequence  of  his 
not  having  treated  the  subject  in  conjunction  with  others, 
with  which  it  is  necessarily  connected."  '^  Raymond 
thought  that  pride  and  the  innate  feeling  of  independence 
make  untrue  Malthus'  claim  that  almshouses  and  public 
aid  will  cause  an  increase  of  population.  ^  He  claimed 
that  not  over-population  but  a  faulty  distribution  was 
the  cause  of  poverty  in  England : 

When  the  tendenc}'  of  a  system  of  laws  is  to  throw  all  the 
property  into  the  hands  of  a  few,  the  inevitable  consequence, 
in  a  state  of  refinement  in  arts  and  civilization,  will  be  to 
reduce  the  remaining  portion  of  the  nation  to  such  a  state  of 
poverty  and  dependence  as  will  subject  them  to  all  the  horrors 
of  famine,  upon  every  fluctuation  in  the  demand  for  their  labor, 
however  abundant  the  necessaries  of  life  may  be  in  the  country, 
and  unless  there  are  countervailing  laws,  which  shall  com_pel 
such  a  distribution  of  food  as- will  prevent  starvation.  It  mat- 
ters not  how  abundant  food  maj'  be,  if  it  all  belongs  to  a  small 
portion  of  the  nation,  and  the  rest  of  the  nation  has  nothing 
to  buy  it  with ;  a  large  portion  will  be  left  to  starve,  unless 
some  provision  is  made  by  law  for  the  distribution  of  it  among 
the  poor.  Private  charity  is  not  adequate  to  prevent  such  a 
catastrophe.  ^ 

This  artificial  or  legal  expression  is  characteristic  of 
Raymond.  It  should  be  remembered  that  he  was  not 
a  professional  economist  but  a  professional  lawyer.  Ar- 
guments legal  and  theological  in  nature  so  pervaded  his 

'/&.,  2nd  ed.,  II,   67.       »  Ih.,  80. 

*  Raymond,   Political  Economy,   2nd   ed.,    II,    74-75. 


26  THE    RICARDIAN    RENT    THEORY 

reasoning  that  economic  laws  were  often  disregarded 
even  in  questions  which  were  primarily  of  an  economic 
nature.  This  observation  holds  particularly  in  his  treat- 
ment of  population.  He  teaches  that  God  would  not 
establish  laws  that  would  lead  an  increasing  population 
to  starvation. 

He  thought  that  Malthusianism  owed  its  great  popu- 
larity to  the  rich.  "It  is,"  said  he,  "very  convenient 
and  very  palatable  for  those  who  have  all  the  property, 
to  preach  up  the  inutility  of  making  provision  for  those 
who  have  none;  and,  with  them,  a  theory  of  population, 
or  a  system  of  Political  Economy,  which  establishes  such 
a  doctrine,  would  be  likely  to  be  very  popular."  ^^  Jar- 
rold  had  previously  given  a  similar  discussion  on  this 
point.  ^^  Our  author's  radical  suggestion  for  the  elim- 
ination of  poverty  was  to  have  all  the  property  in  the 
Kingdom,  at  least  once  in  every  generation,  divided  pro- 
portionately among  the  people.  ^- 

The  threefold  division  of  productive  factors  into  land, 
labor,  and  capital,  Raymond  disregarded.  "That  por- 
tion," he  said,  "which  Adam  Smith  and  Malthus  call 
profits,  is  made  up  in  part  of  rent,  and  in  part  of  wages. 
What  they  call  the  profits  of  capital,  is  either  rent  or 
interest,  and  to  avoid  a  multiplicity  of  distinctions,  it 
had  better  be  called  rent  than  interest,  if  it  be  necessary 
to  distinguish  it  from  wages.  But  as  such  minute  dis- 
tinctions are  wholly  unnecessary  and  useless,  the  better 
way  is  to  divide  the  product  of  the  land  and  labor,  be- 
tween the  owner  of  the  land  and  the  cultivator,  and  call 
one  part  rent,  and  the  other  wages."  ^^ 

He  treats  the  earth  as  the  "source  of  all  wealth,"  and 

^^  lb.,    72. 

'^  Jarrold,  Dissertation  on  Man,  314-362. 

^-  Raymond,   Political  Economy,  2nd  ed.,  II,   82. 

^Ib.,   I,   202-203. 


DANIEL    RAYMOND  27 

labor  as  the  "cause  of  all  wealth."  ^*  He  amalgamates 
machinery  with  the  productive  factor,  inan.  ^'^  These 
are  basic  principles  with  him,  and  make  possible  the  divi- 
sion of  all  incomes  into  wages  and  rent. 

A  theory  of  prosperity,  as  was  Raymond's,  is  neces- 
sarily dynamic  rather  than  static.  Were  desires  reck- 
oned as  static,  it  would  follow  that  the  development 
of  machinery  would  greatly  diminish  the  necessity  for 
human  exertion.  But,  said  Raymond,  "The  wants  of 
man  are  indefinite  and  unlimited,  and  as  fast  as  he  con- 
trives to  supply  one  want  with  a  less  quantity  of  labor, 
another  equally  pressing  want  springs  up  to  supply  its 
place,  and  impose  new  necessity  for  labor."  ^^ 

The  growth  of  desires  for  a  greater  variety  and  a 
superior  quality  of  goods  stimulates  the  development 
of  productive  capacity  to  supply  these  desires.  Larger 
productive  capacity  enhances  the  demand  for  and  the 
earnings  of  labor,  thereby  making  necessary  a  larger 
population  from  which  the  supply  of  labor  may  be  in- 
creased. 

He  taught  that  wages  were  governed  by  the  law  of 
supply  and  demand,  but  that,  in  a  developing  society, 
the  demand  for  labor  exceeds  the  supply,  so  that  wages 
gradually  increase.  Treating  labor  as  the  cause  of  all 
wealth,  and  minimizing  the  principle  of  diminishing 
returns,  he  conceived  a  dynamical  increase  in  the  pro- 
ductive power  of  labor  due  to  the  multiplication  of 
numbers.  Large  numbers  supply  all  the  advantages  of 
nearby  markets  and  a  more  perfect  division  of  labor. 
While  productive  capacity  is  being  augmented  through 
an  increase  of  numbers,  the  demand  for  commodities 
is  growing  for  a  greater  variety  and  a  superior  quality 

"/&.,  91,  92.       ^^Ib.,  98. 

'"  If).,  a,  109. 


28  THE    RICARDIAN    RENT    THEORY 

of  goods.  His  concept  of  the  dynamical  increase  of 'de- 
mands is  such  as  to  keep  demand  ever  in  advance  of 
the  supply.  The  conclusion  following  this  argument  is, 
that  wages  are  augmented  because  of  an  increase  in  pop- 
ulation. We  shall  now  see  that  the  difference  between 
Raymond  and  Ricardo  on  rent  is  not  less  striking  than 
were  their  unlike  views  on  wages. 

A  national  economist  would  hardly  be  expected  to 
accept  the  Ricardian  theory  of  rent,  which  serves  an 
individualistic  economics  so  well,  and  which  formed 
the  basis  for  the  then  prevailing  arguments  for  the  free- 
dom of  trade.  Raymond  defined  rent  as  "that  portion 
of  the  product  of  labor  or  an  equivalent,  which  the  pro- 
prietor of  the  land  is  entitled  to,  for  the  use  of  his 
land."  ^^  He  makes  rent  a  contract  payment  for  the 
use  of  land.  Elsewhere  he  strictly  assimilates  rent  to 
prices  in  general.  "Some  writers,"  said  he,  "and  espe- 
cially Mr.  Malthus,  have  taken  great  pains  to  establish 
a  distinction  in  principle,  between  rent  paid  for  the  use 
of  land,  and  the  price  paid  for  the  use  of  commodities 
or  personal  property,  and  the  attempt  to  establish  such 
a  distinction,  where  in  fact  no  such  distinction  exists, 
except  in  name,  has  led  them  into  some  very  singular 

9  9  ^R 

errors.    ^* 

Since  the  distinction  between  the  price  paid  for  usance 
in  general  and  rent  is  only  nominal,  there  can  be  no 
particular  law  of  rent  other  than  that  which  regulates 
the  prices  of  goods.  Now  that  a  theory  of  rent  is  a 
theory  of  price,  the  real  inquiry  becomes  a  question  of 
price  determination. 

Very  unlike  a  marginal  cost  theory  was  Raymond's 
view :  "Both  the  rent  and  price  of  land  are  regulated 
and  governed  by  the  same  laws  which  regulate  and  gov- 

"/{>.,  T,  192.       «/b.,  I,  184. 


DANIEL    RAYMOND  29 

ern  the  price  of  corn  and  everything  else.  The  price 
of  everything  depends  upon  the  proportion  which  exists 
between  the  supply  and  the  demand."  ^^ 

Similarly,  he  regards  the  distinctions  between  rent 
and  interest  as  only  nominal.  "The  consideration,"  he 
said,  "paid  for  the  use  of  land  is  called  rent ;  that  paid 
for  the  use  of  money  is  called  interest."  ^"^  He  speaks 
of  land  as  capital,  and  identifies  land  and  capital  as  com- 
posing a  common  capital  fund.  Both  are  spoken  of  in 
the  same  sense  as  instruments  in  man's  hands  for  pro- 
ductive purposes.  -^  He  speaks  of  both  rent  and  interest 
as  a  per  cent.  --  Both  are  governed  by  the  same  law 
— that  of  supply  and  demand.  -^  In  a  rude  government, 
he  says,  some  risk  enters  into  the  loaning  of  capital  other 
than  land,  -*  but  "independent  of  the  risk  of  losing  the 
principal,  the  interest  of  money  ought  to  be  at  precisely 
the  same  rate  as  the  rent  of  land."  " 

Now  that  land  is  capital,  and  that  the  same  laws  must 
regulate  returns  to  all  capital,  consistency  will  not  per- 
mit a  law  of  diminishing  returns  to  apply  to  land  while 
a  law  of  increasing  returns  is  applicable  to  manufactures. 
For  a  serious  consideration  of  diminishing  returns,  how- 
ever, Raymond  was  on  the  wrong  side  of  the  Atlantic. 
Why  would  a  lawyer  be  concerned  over  diminishing 
returns  w'hen  no  more  than  a  gap  had  been  made  in  the 
waiting  forests  of  a  new  world?  Not  to  overcome  the 
niggardliness  of  nature  but  to  augment  the  population 
was  his  problem.  "To  what  extent,"  said  he,  "the  fruits 
of  the  earth  may  be  augmented,  no  human  intelligence 
can  tell.     For  aught  that  we  can  perceive,  the  earth  is 

«76.,  183. 
20 /ft.,   254. 
^Ib.,  104-105. 
22 /b.,  259. 
23/6.,   Chap.  XII. 
2</i..,  I,  253. 

26/6. 


30 


THE    RICARDIAN    RENT    THEORY 


capable  of  being  made  to  yield  an  indefinite  and  almost 
unlimited  quantity  of  food.  We  can  no  more  fix  limits 
to  the  powers  of  the  earth  to  produce  the  necessaries  of 
life  than  we  can  fix  limits  to  the  powers  of  life  itself, 
or  to  the  artificial  wants  of  men.  .  .  ,  The  fruits 
of  the  earth  are  multiplied  almost  in  proportion  to  the 
labor  bestowed  upon  it."  -^ 

But  this  extravagant  optimism  is  modified.  "I  am  far 
from  supposing,"  said  he,  "that  the  earth  is  capable  of 
being  made  to  increase  its  fruits  with  the  same  rapidity, 
that  the  unrestrained  powers  of  procreation  are  capable 
of  multiplying  the  human  species."  -'  These  powers, 
unrestrained,  would  so  increase  the  population  that  "uni- 
versal starvation  would  sweep  them  off."  -^  But  he 
thinks  that  the  laws  of  nature  will  so  regulate  population 
that  man  need  not  interpose  his  agency.  -^  Just  what 
these  laws  are  or  how  they  work,  he  fails  to  inform  us, 
yet  he  admonishes  us  to  obey  them. 

The  effect  of  machinery  is  to  increase  corn-rent,  but 
not  money-rent.  Agricultural  improvements  may  throw 
some  labor  out  of  employment,  but  this  labor  would  find 
employment  in  the  extension  of  manufactures.  ^° 

Raymond's  want  of  method,  his  ungrammatical  and 
illogical  statements,  together  with  occasional  contradic- 
tions, leave  no  definite  conclusion  to  be  drawn.  Though 
he  assimilates  land  and  capital,  the  trend  of  his  dis- 
cussion seems  to  recognize  dynamical  diminishing  re- 
turns in  agriculture,  which,  however,  are  more  than 
counterbalanced  by  increasing  returns  to  machinery. 
This,  together  with  the  idea  that  growing  prosperity 
accompanies  the  increase  of  population,  and  that  divine 

«/b.,  IT,  m. 
^  lb.,  112. 
«/6.,  II,   113. 

«>/&!,  Chap.  VIII. 


ALEXANDER    H.    EVERETT  31 

laws  will  most  wisely  regulate  numbers,  certainly  leads 
to  most  optimistic  predictions  regarding  the  future  well- 
being  of  man.  On  the  whole,  we  find  that  Raymond 
was  diametrically  opposed  to  the  gloomy  Maltho-Ricar- 
dian  theory. 

Quite  in  harmony  with  this  attitude  were  the  ideas 
of  Everett.  Like  Raymond,  Alexander  H.  Everett 
(1790-1847)  was  a  lawyer.  His  book  New  Ideas  on 
Population  appeared  on  the  same  date  as  Raymond's 
second  edition.  Both  he  and  Raymond  were  national 
economists  of  the  same  political  faith.  Their  scientific 
writings,  it  is  feared,  may  have  been  colored  by  the 
ardent  zeal  they  held  in  common  for  the  doctrines  of 
John  Quincy  Adams.  Not  less  pronounced  than  their 
deference  to  Adams  was  their  common  dislike  for  the 
pessimistic  theories  of  the  Maltho-Ricardian  school. 

This  writer  was  a  brother  of  Edward  Everett;  he 
studied  law  in  the  office  of  John  Quincy  Adams  and 
served  on  many  important  commissions.  As  he  was 
an  orator  and  statesman  of  ability,  as  well  as  a  member 
of  his  state  senate  and  a  minister  plenipotentiary  at 
the  court  of  Spain,  his  works  w^ere  influential  and  found 
wide  circulation. 

Everett  did  more  on  the  population  aspect  of  the 
problem  than  did  any  other  of  the  early  American  writ- 
ers. In  addition  to  the  work  just  mentioned,  he  carried 
on  a  correspondence  with  George  Tucker  respecting  the 
population  problem,  and  made  many  speeches  on  the 
subject.  He  conferred  personally  with  Malthus  on  this 
question.  ^^ 

*i  Everett,  Nev)  Ideas  on  Population,  1st  ed.,  pref.  Everett  was  ?rad- 
Tiated  with  highest  honors  at  Harvard  in  1806;  he  was  appointed  United 
States  charge  d'affavres  at  the  Hague  in  1818.  Afl«r  servins;  as  Minister 
to  Madrid,   he  returned   in   1825  to  America  and  became  editor  and  pro- 


32 


THE    RICARDIAN    RENT    THEORY 


His  work  on  population  begins  with  objections  to  the 
ideas,  (i)  that  poHtical  institutions  are  the  source  of  all 
evil,  and  (2)  that  they  have  no  tendency  to  improve  the 
condition  of  mankind,  and  are  entirely  indifferent.  He 
said,  "The  former  proposition  is  directly  maintained  by 
Godwin,  and  the  latter  is  implied  in  the  theory  of 
Malthus."  ^- 

Like  Raymond,  he  thinks  that  Malthus  assumes  too 
much  from  the  single  example  of  the  rapid  increase  of 
population  in  America.  "To  assume  the  highest  known 
rate  of  increase  ...  as  the  standard  of  the  ordi- 
nary progress  of  population,  would  be  like  assuming 
the  strength  and  intelligence  of  the  most  powerful  and 
wisest  man  ...  as  the  standard  of  the  ordinary 
physical  and  intellectual  endowments  of  the  race.  It 
would  be  unsafe  to  draw  a  general  conclusion 
from  a  single  instance ;  and  that  the  single  instance  least 
suitable  for  this  purpose  would  be  precisely  those  of 
the  highest  and  of  the  lowest  known  rates  of  increase; 
the  former  of  which  has  been  selected  by  Mr.  Mal- 
thus." ^^  He  says  we  must  know  the  power  of  popula- 
tion to  increase,  the  checks  and  the  rates  of  increase 
under  these  checks,  as  well  as  the  rate  at  which  food  can 

prietor  of  The  North  Ame.rican  Review.  He  was  a  member  of  the  Massa- 
chusetts legislature,  a  confidential  agent  of  the  eovernment  to  Cuba,  1840. 
He  was  appointed  to  a  diplomatic  post  at  Pelcing.  1845.  He  was  a 
frequent  contributor  to  The  Monthly  AvthoTagy,  18031811.  His  first 
important  book  was  Europe,  Powers,  with  Conjectures  on  the  Futmre 
Prospect,  1822.  This  was  translated  into  German,  French,  and  Spanish. 
Other  books  were:  Neio  Ideas  on  Population  1823:  Critical  and  Miscellane- 
ous Essays  1845-1847;  Life  of  Joseph  Warren  and  Life  of  Patrick  Henry 
in  Sparks'  American  Bionraphies.  He  was  a  frequent  contributor  to 
The  North  Atnerican  Review ;  he  also  contributed  economic  essays  to 
The  Boston  Quarterly.  (Nat.  Encyc.  of  Amer.  Biog.,  IX,  256.  See  also 
Nexv  Inter.  Encyc,  VII.   312.) 

The  North  American  Revievj  was  warm  in  its  praise  of  the  New  Ideas 
(North  Amer.  Rev.,  Oct.,  1823;  Jan.,  1827).  After  most  elaborately 
praisine  the  New  Ideas,  a  reviewer  in  The  North  American  Review  said, 
"Mr.  Everett's  arguments  are  triumphant,  and  amount  to  a  complete 
demonstration."      (XXIV,  210). 

32  Everett,  New  Ideas  on  Population,  2nd  ed.,   120. 

»/&.,   53-54. 


ALEXANDER    H.    EVERETT  33 

be  obtained,  before  we  can  compare  the  rates  of  increase 
between  population  and  food.  ■''' 

Everett  urges  another  criticism  against  Malthus.  "He 
views,"  said  Everett,  "every  individual  added  to  society 
as  an  additional  consumer,  without  appearing  to  reflect, 
that  he  is  also  at  the  same  time  an  additional  laborer."  •'^' 
This  seems  hardly  just  to  Malthus,  for  he  knew  as  well 
as  did  Everett  that  more  individuals  means  more  labor- 
ers. This  criticism  implies  a  misunderstanding  on  the 
part  of  Everett  as  to  the  real  problem  confronting  Mal- 
thus, namely,  that  of  historical  diminishing  returns.  Be 
this  as  it  may,  it  was  in  criticism  of  this  view  that  Ever- 
ett advanced  the  "new  idea"  which  furnished  the  main 
thesis  and  the  title  of  his  book.  Briefly,  the  "new  idea" 
teaches  that  the  increase  of  population  is  the  cause  of 
abundance  and  not  of  scarcity.  ""^ 

Natural  advantages  and  skill  determine  the  productive- 
ness of  labor.  ^'  He  assumed  natural  advantages  to  be 
invariable  in  order  that  he  might  determine  what  effect 
an  increase  of  population  would  have  upon  skill.  He 
fails  to  consider  diminishing  returns,  and  argues  to  the 
effect  that  the  greater  the  density  the  more  perfect  be- 
comes the  division  of  labor.  Like  Adam  Smith  and 
Raymond,  he  thinks  that  the  division  of  Jabor  stimu- 
lates the  invention  of  new  machinery,  ^*  and  develops 
all  the  parts  of  industry.  The  progressive  rate  of  pro- 
duction is  considerably  more  rapid  than  that  of  the 
increase  of  population.  During  the  seventeenth  century, 
the  population  of  Great  Britain  doubled,  claimed  Everett, 
while  its  productive  power  multiplied  a  thousand  times. 
Malthus'  ratios  run,  for  food,  i,  2,  3,  4,  5,  6,  etc.,  and 

»</&.,  54. 
^ib.,  21. 

»»/&.,  Chap.  II. 

^  lb.,  24. 

« lb.,  27.     Adam  Smith,  Wealth  of  Nations,  I,  H. 


34 


THE    RICARDIAN    RENT    THEORY 


for  population,  2,  4,  8,  16,  32,  64,  etc. ;  while  Everett's 
ratios  run,  for  food,  i,  10,  100,  1000,  io,(X)o,  ioo,ocx), 
etc.,  and  for  population,  2,  4,  8,  16,  12.,  64,  etc.  He 
called  this  estimate  moderate,  and  adds  that  it  "is  still 
much  higher  than  it  need  be"  in  order  to  refute  the 
system  of  Malthus.  ^^ 

Despite  these  statements,  so  absurdly  large,  he  else- 
where admits  a  principle  of  resistance  but  regards  it  of 
no  importance  and  as  belonging  to  an  abstract  theory  of 
perfectibility.  ■*"  He  makes  much  of  the  point  that  pop- 
ulation is  not  supported  on  the  same  soil  that  it  occupies, 
and  that  Malthus  does  imply  such  an  assumption.  He 
considers  the  time  far  distant,  if  indeed  it  shall  ever 
come,  when  population  will  press  upon  the  means  of 
svibsistence,  whereas  Malthus  considered  that  such  pres- 
sure had  long  existed.  *^ 

What  he  terms  the  "new  idea"  was,  in  reality,  the 
"old  idea,"  ^-  and  it  was  the  only  idea  in  the  book  worthy 
of  consideration.  None  of  his  economic  writings  can 
claim  more  scientific  merit  than  the  book  just  reviewed. 
Further  space  will  not  be  given  them. 

Although  not  illuminating  in  one  sense,  there  is  a 
sense  in  which  the  works  just  reviewed  are  most  in- 
structive. They  express  the  American  idea  of  that  time. 
They  exemplify  a  felt  disproportionality,  a  pressing  need 
for  a  larger  population.  No  one  expects  to  find  in  the 
America  of  1823  a  favorable  reception  of  Ricardian  rent, 
embodying,  as  it  does,  the  Malthusian  theory  of  popula- 
tion. Popular  writers  like  Raymond  and  Everett,  who 
were  not  economists  primarily,  are  not  supposed  to  ac- 
cept so  pessimistic  a  doctrine.     Their  profession  steeped 

^  Everett,  "New  Ideas  on  Population,  2nd  ed.,  26,  27. 
*°Jh..  44. 

"Malthus,  Essay  on  Po'pulation,  2nd  ed.,  353,   3!i4. 

■^^Cannan.    Theories    of    Production    and    Distribution,    124-130;       Gide 
and  Rist,  Eistoire  des  Doctrines  Economiques,  140. 


WILLARD    PHILLIPS  35 

them  in  the  "American  idea,"  and  their  national  environ- 
ment was  boundless  opportunity.  They  could  not  enter- 
tain an  opinion  based  upon  the  niggardliness  of  nature. 

The  third  of  the  early  national  economists  in  point  of 
time,  and  the  ablest  of  the  three,  was  Willard  Phillips 
(1784-1873).  This  author  held  views  so  similar  to 
those  of  Raymond  and  Everett  that  they  should  be  con- 
sidered in  the  same  chapter.  The  three  were  reared 
and  edmcated  contemporaneously  in  New  England. 
Around  them,  a  new  and  really  national  life  was  being 
developed;  American  isolation  and  the  struggle  for  in- 
dustrial independence  were  forces  which  caused  a  pro- 
nounced movement  for  protection ;  and  a  comprehensive 
policy  was  being  formulated  for  the  development  of  the 
resources  of  this  country.  Particularly  true  were  these 
conditions  in  the  twenties,  when  appeared  the  works  of 
the  economists  under  review. 

Phillips,  like  Raymond  and  Everett,  was  a  lawyer  by 
profession,  a  national  economist,  and  an  opponent  of 
Malthusianism.  He  was  a  business  man  who  for  thirty 
years  was  president  of  a  life  insurance  company;  a  law- 
yer who  acted  in  the  capacity  of  judge  for  eight  yearai; 
an  editor  who  was  connected  with  four  of  the  leading 
journals  of  the  time,  and  also  with  Pickering's  Report^ 
and  an  author  who  wrote  on  questions  of  law  and  politi- 
cal economy.  *^ 

^  The  Twentieth  Cevfury  Biortrnphical  Dictioiiary  of  Tooled  Americans, 
VIII,  (no  paging).  Willard  Phillips,  editor  and  author,  born  Bridge- 
water,  Mass.,  Dec.  19.  1784,  died  Cambridge,  Mass.,  Sept.  9.  1873. 
Harvard  A.B.,  1810;  A.M.,  1813:  tii'or  there  1811-181.5.  Practised 
law-  in  Boston  1818-184.5.  Representative  in  the  General  Court,  1825- 
1826;  judge  of  probate  of  Suffolk  County,  1839-1847.  President  of  New- 
England  Mutual  Life  Insurance  Company,  1843  to  his  death  in  1873. 
LL.D.  Harvard.  1853.  Fellow  in  the  American  Academy  of  Arts  and' 
Sciences.  Connected  editorially  with  the  General  Repository  and  Revieto  ; 
North  American  Review;  American  Jurist;  first  and  second  Americar> 
editions  of  Collyer's  Lav)  Partnership  (1834-1839)  and  the  first  eight 
volumes  of  Pickering's  Reports.  He  was  author  of  Treatise  on  the  Law 
of    Insurance    (1823);    Manual   of   Political   Economy    (1828);    The   Law 


36  THE    RICARDIAN    RENT    THEORY 

Phillips'  Manual  of  Political  Economy  is,  in  keeping 
with  its  author,  a  practical  rather  than  a  theoretical  work. 
His  reasoning  is  accompanied  throughout  with  copious 
historical  illustrations  and  statistical  data,  evincing  a 
fund  of  information  regarding  our  resources.  "The  lit- 
erary execution  of  the  work  is  highly  creditable  to  the 
author.  The  style  is  correct,  perspicuous,  and,  as  far 
as  the  nature  of  the  subject  admits,  elegant."  ** 

"The  object  of  this  treatise,"  said  Phillips,  "is  to 
present  ...  a  concise,  practical  view  of  the  most 
important  principles  of  this  science,  with  an  adaptation, 
more  particularly,  to  the  circumstances  and  conditions 
of  the  United  States."  *^  He  admits  that  the  economic 
principles  of  one  nation  may  not  be  wholly  different 
from  those  of  another,  but  they  may  "have  a  practical 
application  in  some  places  and  be  totally  inapplicable 
elsewhere."  *® 

In  harmony  with  Lord  Lauderdale  and  Daniel  Ray- 
mond, he  takes  the  national  view,  ^'^  and  regards  wealth 
as  capacity  for  production.  He  does  not  limit  himself 
to  things  which  are  bought,  sold,  and  exchanged,  and 
are  subject  to  property.     National  productive  capacity, 

of  Patents  for  Inventions,  including  the  Remedies  and  Legal  Proceedings 
in  Relation  to  Patent  Rights  (1837);  The  Inventor's  Guide  (1837); 
Protection   and  Free   Trade    (1850). 

Through  correspondence  I  am  informed  that,  "Mr.  Phillips  had  a 
stron;?  sympathy  for  the  common  man.  He  vras  always  willing  and 
anxious  to  help  the  needy.  He  was  very  practical  and  sympathetic  in 
his  writings,  in  his  daily  life,  and  in  the  great  business  of  life  insur- 
ance to  which  he   gave   so  large   a  share   of  his  tima   and   study." 

See  also  Appleton's  Encyclopedia  of  American  Biography,  IV,  763.  Ho 
was  editor  with  Jared  Sparks  (1817-1818)  and  frequent  contributor  to 
The  North  American  Review. 

■"  North  American  Revieiv,  XXXII,   216. 

^Phillips,   Manual  of  Political  Economy,  Pref.,  v. 

^  lb.,  vi. 

'"  Professor  D.  R.  Dewey  says,  "The  Manual  is  an  exposition  of  Eng- 
lish and  academic  theory  then  current.  Further  experience,  however, 
changed  the  author's  convictions  and  the  later  work,  a  systematic  de- 
fense of  i)rotection  in  the  form  of  seventy  propositions,  is  of  value  as 
illustrating  the  intellectual  exposition  of  protectionism  at  this  time  in 
the  United  States."  Palgrave,  Diet,  of  Pol.  Econ.,  Ill,  103.  This 
statement   is    in   error. 


WILLARD    PHILLIPS 


37 


he  thinks,  must  consider  the  free  as  well  as  the  slave, 
a  salubrious  atmosphere,  and  a  navigable  river  without 
tolls  as  well  as  a  canal  with  tolls.  He  agrees  with  Lord 
Lauderdale  that  a  great  scarcity  of  water,  which  occa- 
sions that  necessity  to  become  private  property  and  sub- 
ject to  purchase  and  sale,  makes  some  individuals  richer, 
and  the  community  poorer.  Phillips  would  have  argued 
that,  had  Providence  constructed  a  broad  flowing  and 
navigable  river  from  Colon  to  Panama,  it  would  have 
been  an  object  of  wealth  as  truly  as  is  a  man-made 
canal  costing  three  hundred  and  fifty  millions.  "We  per- 
ceive," said  he,  "from  these  instances,  that  the  capacity 
and  facilities  for  production  are  not  tested  and  meas- 
ured by  the  mere  subject  of  property  or  of  things  bought 
and  sold  in  a  community.  It  would  be  unnecessary  to 
notice  this  distinction,  had  not  the  industrial  means  and 
faculties  of  a  nation  been  denominated  national  wealth, 
and  we  must  therefore  guard  ourselves  against  accept- 
ing the  word  zvcalth  in  its  ordinary  meaning  when  it  is 
so  applied."  ^* 

His  third  chapter  contains  a  forceful  argument  against 
the  labor-cost-of-production  theory  of  value.  He  limits 
value  to  things,  material  or  immaterial,  which  are  sub- 
ject to  purchase  and  sale.  His  clear  arguments  and 
numerous  illustrations  are  all  to  the  eflfect  that  value 
is  subjective  and  individualistic,  and  may  or  may  not 
correspond  with  cost.  The  following  words  are  in  har- 
mony with  the  whole  of  his  discussion  of  value:  "Some 
instruments  are  merely  useful,  as  the  implements  of 
husbandry  and  the  tools  of  mechanical  trades ;  others 
again  are  in  some  hands  the  implements  of  industry,  in 
others,  those  of  amusement.  The  amateur  uses  his  violin 
for   recreation,   the  professor   for    a    livelihood.      The 

^  Phillips,  Manual  of  Political  Economy,  12-14.     Quotation,  13-14. 

47934 


38  THE    RICARDIAN    RENT    THEORY 

hunter  labors,  but  the  sportsman  amuses  himself  in  the 
chase.  The  desire  to  obtain  any  particular  thing  gives 
it  its  value,  and  the  motives  of  such  desire  are  as  vari- 
ous and  numerous  as  the  appetities,  tastes,  passions, 
w^ants,  and  caprices  of  mankind.  As  value  is  created 
by  this  desire,  so  it  is  limited  by  its  strength  and  in- 
tensity." "^ 

His  is  rather  an  instrumental  concept  of  capital,  al- 
though he  speaks  of  land  as  capital,  ^^  and  at  times  of 
rent  as  a  per  cent  of  the  value  of  property.  ^^  But  he 
shifts  from  the  technological  to  the  value  concept  of  cap- 
ital and  reasons  correctly  thus  :  "The  value  of  all  capital 
is  estimated  by  the  income  derived  from  it."  ^- 

Turning  now  to  the  tariff,  we  are  met  wath  a  politico- 
economic  question,  which,  from  the  birth  of  economics, 
has  been  impregnated  with  prejudice.  The  scientist  and 
the  man  are  inseparable  always,  but  on  this  question 
human  frailty  predominates,  and  the  will,  rather  than 
the  reason,  rules.  But  much  to  the  credit  of  our  author, 
his  long,  interesting,  and  bountifully  illustrated  chapter 
(VIII)  on  commerce  is  a  defense  for  the  tariff  eyincing 
much  talent  and  little  bias.  The  North  American  Revie-w 
said,  "His  argument  on  the  subject  is  powerful,  lucid, 
and  as  we  think,  conclusive."  ^^ 

Enough  has  been  said  to  show^  that  the  economics  of 
Phillips  was  upon  a  different  basis  from  that  of  the 
Maltho-Ricardian  school.  He  considered  Malthus'  work 
on  population  to  be  of  little  importance.  He  spoke  of 
it  as  "the  now  hackneyed  doctrine,"  ^^  and  said  that, 
"the  w^hole  argument  has  been  confuted  in  a  less  known 
work  by  Air.  S.  Gray."  ''^ 

«/&.,    33.       ^Ih.,  97. 

"  lb.,  98.       52  jj)^  97_ 

'^  North   Am»rican   Review,  XXXII,   229. 

"  Phillips,  Manual  of  Political  Economy,   75. 

w/6.,  139. 


WILLARD   PHILLIPS  39 

The  ideas  of  Mr.  Gray  to  which  Phillips  pins  his 
faith  are:  (a)  The  means  of  subsistence  increase  faster 
than  does  population,  as  evinced  by  the  facts  of  uncul- 
tivated or  ill-cultivated  lands,  and  the  emigration  from 
the  country  to  the  city  because  of  a  want  of  employ- 
ment in  the  production  of  more  food.  He  argued  also 
that  prices  had  been  reasonable,  (b)  Then,  in  harmony 
with  Everett's  New  Ideas,  Gray  argued  that  "the  in- 
crease of  population  instead  of  having  a  tendency  to 
diminish  employment  and  produce  poverty,  is  the  grand 
source  of  all  permanent  increase  in  employment  and 
wealth."  •"*®  Phillips  accepted  this  argument  and  said, 
"not  only  an  intelligent  and  industrious,  but  also  a  dense 
population  is  necessary  to  bring  out  all  the  natural  ad- 
vantages for  production."  "  He  would  not  "hail  famine 
as  a  deliverer,  and  celebrate  a  pestilence  as  a  subject  of 
thanksgiving."  ^* 

Very  unlike  the  English  doctrines  of  that  time  were 
the  arguments  of  Phillips.  Very  little  reason  is  there 
for  Professor  Dunbar's  implication  that  Phillips  was  a 
disciple  of  Adam  Smith,  and  for  his  borrowed  state- 
ment that  "he  [Phillips]  sought  to  take  up  the  subject 
where  Adam  Smith  had  left  it."  ^^ 

^Pamphleteer,  XVII,  415.  In  his  Happiness  of  the  State,  Mr.  Gray 
writes  a  chapter  (Bk.  VI,  Chap.  3)  to  demonstrate  that  population  regii- 
lates  subsistence  rather  than  the  reverse.  He  claimed  that  America's  great 
production  Mas  due  to  a  rapidly  increasing  population.  439.  He  said, 
"From  tliis  analysis  of  circumstances,  the  fact  in  nature  is  clearly  estab- 
lished, that  population  regulates  subsistence,  not  subsistence  population; 
that  the  progress  of  subsistence,  with  the  exception  of  occasional  irregu- 
larities, is  caused  by  the  progress  of  population  and  by  the  skill  and  indus- 
try of  that  population  :  In  other  words  that  it  is  the  ratio  of  the  increase 
of  population,  rapid  or  slow,  which  regulates  the  ratio  of  the  increase  of 
subsistence.  .  .  .  Population  will  force  subsistence  on  at  a  rate,  at 
least  equal,   but   generally   higher  than    its   own."      445-446. 

^  Phillips,  Manual   of  Political  Economy,   106. 

^/6.,  140. 

^  Dunbar,  Essays,  II.  I  see  no  evidence  that  Professor  Dunbar  had 
read  the  work  he  criticised.  He  said:  "Willard  Phillips  produced  a 
treatise  (1828)  in  which,  treating  the  whole  structure  of  Malthus  and 
Ricardo  as  unsound,  he  sought  to  take  up  the  subject  where  Adam  Smith 
had  left  it.  He  treated  it  with  an  abundant  knowledge  of  industrial 
and    commercial    facts,    and    with    a    mind    well    trained    for    speculative 


40 


THE    RICARDIAN    RENT    THEORY 


Phillips  defined  rent  to  be  "the  net  proceeds  of  the  an- 
nual products  over  and  above  the  expenses  of  produc- 
tion." '^^  He  regards  rent  in  the  sense  of  surplus  produce 
rather  than  as  a  contract  payment  by  the  farmer  to  the 
landlord.  ^^ 

After  a  deriding  criticism  of  Ricardo's  rent,  he  said, 
of  the  no-rent  concept,  "It  might  be  readily  tested,  and 
confuted  too,  by  merely  going  into  the  country  and 
learning  that  the  land  last  enclosed  for  wheat  yielded 
rent.  It  proves  that,  after  rents  have  once  accrued  in 
a  community,  every  extension  of  wheat  cultivation  is 
detrimental  to  the  national  prosperity.  It  proves  also 
that  if  all  the  lands  are  of  equal  fertility,  rents  will 
never  accrue."  *'- 

Here,  of  course,  Ricardo's  intensive  no-rent  concept 
is  overlooked.  Ricardo,  however,  had  laid  his  argu- 
ment open  to  this  criticism  when  he  said,  "If  all  land 
had  the  same  properties,  if  it  were  unlimited  in  quantity, 
and  uniform  in  quality,  no  charge  could  be  made  for 
its  use,  unless  where  it  possessed  peculiar  advantages  of 
situation.  It  is  only,  then,  because  land  is  not  unlimited 
in  quantity  and  uniform  in  quality,  and  because  in  the 
progress  of  population,  land  of  an  inferior  quality,  or 

inquiry,  but  it  was  complained,  even  by  a  friendly  contemporaiy  critic, 
that  he  reared  nothing  in  the  place  of  that  which  he  sought  to  remove." 
11-12.  One  has  to  read  only  a  small  portion  of  the  first  six  pages  of 
the  nineteen  page  review,  evidently  referred  to  by  Professor  Dunbar,  to 
find  almost  every  word  of  his  criticism.  His  last  statement  seems  to 
refer  to  the  whole  work,  whereas  the  critic  from  whom  it  is  quoted  wrote 
only  in  relation  to  Phillips'  treatment  of  Malthusianism.  "But,"  said 
Professor  Dunbar,  "it  was  complained,  even  by  a  friendly  critic, 
etc."  Here  is  what  the  critic  had  to  say:  "By  rejecting  the  theory 
of  Malthus  with  its  consequences,  and  taking  up  the  science  where  it 
was  left  by  Adam  Smith,  Mr.  Phillips  has  at  once  cleared  his  subject 
of  a  cloud  of  popular  errors,  and  given  a  value  to  his  work,  which 
does  not  belong  to  any  of  the  recent  English  productions."  (Ko.  Amer. 
Rev.,  XXXII,  220).  Would  not  the  word  "praise"  rather  than  "blame" 
seem  more  appropriate?  The  critic  erred  in  saying  that  Phillips  took 
up  the  subject  where  it  was  left  by  Adam  Smith.  Professor  Dunbar 
doubly  erred  in  copying  an  error  with  which  erroneously  to  classify 
Phillips   with  Adam    Smith. 

•"  Phillins,    Mnvv,nl  of   PoJiHral  Ecoiioiny,   107. 

»/&.,    108.      «/6.,  108-109. 


WILLARD    PHILLIPS  41 

less  advantageously  situated,  is  called  into  cultivation, 
that  rent  is  ever  paid  for  the  use  of  it."  ^^ 

Phillips  declared  that  the  doctrine  was  inapplicable  in 
the  United  States,  and  that  more  wheat  could  be  pro- 
duced here  without  additional  expense  per  bushel.  *'■' 

The  contrast  between  Ricardo's  "one-cause  method" 
and  Phillips'  practical  method  is  illustrated  in  their  dif- 
ferent ways  of  accounting  for  rent.  Some,  not  all,  of 
Phillips'  causes  for  rent  are:  (a)  Regarding  the  soil, 
he  would  consider  its  location  in  relation  to  climatic 
conditions  and  to  the  market,  its  productive  capacity  for 
different  crops,  since  marginal  land  for  one  crop  might 
not  be  marginal  for  another,  also  the  variety,  quantity, 
and  quality  of  products  that  may  be  secured  from  under 
as  well  as  upon  the  soil.  Further  he  would  allow  for 
numerous  advantages  in  a  territory  which  is  so  fertile 
as  to  admit  of  condensing  a  numerous  population  upon 
a  small  territory,  (b)  Regarding  the  population,  he 
would  consider  race  characteristics,  the  degree  of  ad- 
vancement, and  density  as  well  as  the  natvire  of  desires 
and  the  extent  of  purchasing  power.  The  ability  of  a 
farmer  to  select  proper  implements,  to  understand  the 
rotation  of  crops,  to  judge  of  the  best  size  of  farms, 
his  ability  to  procure  suitable  seeds,  good  breeds  of 
animals,  and  to  know  how  and  v/hen  to  market  his 
products,  are  of  important  bearing  on  the  cause  of  rent, 
(c)  Under  the  heading  of  securit}^,  he  mentions  national 
and  individual  protection,  and  the  enforcement  of  con- 
tracts. Under  this  heading  may  be  grouped  also  free- 
dom from  insects,  convulsions  of  nature,  plagues,  and 
calamities.  Their  absence  add  to  the  propitiousness  of 
production,     (d)  Under  the  heading  of  costs  to  produce 

•3  Ricardo,   Principles,  46-47. 

**  Phillips,  Manual  of  Political  Economy,   109. 


42  THE    RICARDIAN    RENT    THEORY 

and  get  commodities  to  the  market,  he  would  include 
such  public  expenditures  as  those  for  dykes,  levees,  rail- 
roads, canals,  and  roads,  and  such  private  expenditures 
as  those  for  building  materials  and  fuel  to  provide  the 
farmer  with  a  home,  together  with  the  annual  outlays 
such  as  for  wages,  interest,  and  hires.  To  determine 
rent,  regard  must  be  had  for  these  forces  and  for  the 
market  value  of  the  product.  •''  Ricardo's  abstract  world 
was  simple:     Phillips'  practical  world  was  complex. 

It  would  be  difficult  to  find  a  better  discussion  than 
Phillips  gives  of  the  manner  in  which  agricultural  pro- 
duction accommodates  itself  to  the  distance  from  the 
market.  The  difficulty  of  transporting  commodities 
causes  lands  distant  from  the  market  to  be  turned  to 
the  production  of  such  products  as  are  highly  durable 
and  that  have  much  value  with  but  little  weight  and 
bulk.  "In  the  United  States,"  said  he,  "innumerable 
cattle,  horses,  sheep,  and  swine  are  driven  to  the  princi- 
pal markets  on  the  Atlantic  coast  from  the  interior  dis- 
tricts, not  because  these  districts  are  not  well  adapted  to 
the  cultivation  of  fruits,  esculant  vegetables,  wheat,  rye, 
beans,  peas  or  onions,  but  because  these  animals  can 
be  sent  to  a  distant  market  at  comparatively  small  ex- 
pense." "^  These  forces  and  transportation  facilities  like 
the  Erie  Canal  tend  toward  the  equalization  of  rents  and 
land  values.  ®' 

Unlike  Ricardo,  he  argued  that  fertility  and  improve- 
ments in  agriculture  cause  rents  to  rise.  ^^  His  thought 
was  that  increasing  desires  would  keep  in  the  lead  of 
augmenting  wealth.  But  he  did  say  that  to  the  extent 
that  prices  fall,  as  a  result  of  the  increa?ed  supply, 
money  rents  would  fail  to  rise.  ®^ 

85 /b.,  Chap.  V,  and   109,   110. 
8«/6.,   110-119.      Quotation,    111. 
^Ib.,  114.      88 /ft        e»  lb.,    11.5. 


WILLARD    PHILLIPS  43 

He  considered  that  an  increase  in  money  rents  was 
not  of  itself  a  blessing  to  the  country  any  further  than 
it  can  make  a  foreign  country  pay  them.  "A  rise  of 
rents  is,  however,  one  indication  of  national  growth  and 
prosperity."  '"  Rising  rents  on  commodities  that  are  not 
necessities,  as  Burgundy  or  Madeira  wine,  the  price  of 
which  is  enhanced  by  the  growing  demand  when  only  a 
limited  amount  of  soil  is  capable  of  their  production,  are 
no  burden  when  consumed  in  the  country  where  pro- 
duced. If  such  commodities  are  consumed  abroad,  the 
nation  producing  them  is  blessed  to  the  extent  that  their 
price  exceeds  their  cost.  Conversely,  the  country  import- 
ing them  is  injured,  "for  by  importing  them,"  he  said,  "it 
exchanges  two,  five,  or  ten  days'  labor  of  its  own  citizens, 
for  one  of  a  foreign  laborer."  '^^ 

Here  Phillips  considers  the  nation  as  a  whole,  and 
overlooks  the  ill  effects  that  monopoly  rents  have  on 
distribution.  But  the  nation,  like  the  individual,  which 
can  export  goods  at  high  prices,  which  cost  little,  and 
at  monopoly  prices,  is  certainly  benefitted  by  doing  so. 

Unlike  Ricardo,  he  thought  that  England's  Corn  Laws 
were  wise.  He  claimed  that  protective  laws  make  a 
country's  agriculture  more  dependable  in  time  of  war. 
Again  he  argued  that,  were  there  no  duty  on  agricultural 
products,  there  would  be  great  fluctuations  in  prices, 
which  would  be  bad  for  internal  economy.  He  advo- 
cates the  peculiar,  though  defensible,  proposition  that 
the  higher  the  general  level  of  prices  in  a  country,  the 
greater  is  the  amount  of  money  taxes  the  citizens  can 
pay.  " 

In  further  dissent  from  Ricardo,  but  in  harmony 
with  Malthus,  he  insists  that  the  interests  of  the  land- 

™  Tb.,  120. 

"76.,  116. 
"/&.,  123. 


44  THE    RICARDIAN    RENT    THEORY 

lords  are  in  harmony  with  the  interests  of  the  whole 
people.  "It  is  too  well  understood,  to  be  made  a  ques- 
tion, that  the  permanent  interests  of  agriculture,  manu- 
factures, and  commerce,  are  intimately  blended  and 
mutually  dependent,  and  each  equally  connected  with 
the  permanent  welfare  of  the  community."  ^^ 

Phillips  treated  the  concept  of  diminishing  returns  as 
a  matter  of  little  or  no  consequence.  Though  he  con- 
ceived this  law  in  the  dynamical  sense,  yet  he  believed 
that  its  consequences  would  be  defeated  by  inventions, 
scientific  methods,  and  skill. 

If  this  work  be  judged  as  a  whole,  he  seems  to  have 
been  influenced  by  Benjamin  Franklin  more  than  by 
any  other  American  writer.  Evidently  he  was  a  great 
admirer  of  Franklin,  whose  economic  writings  he  edited 
for  Jared  Sparks'  collection  of  Franklin's  works. 

Even  to-day  Phillips'  book  is  well  worth  reading.  It 
ably  expressed  the  economic  and  industrial  conditions 
of  this  country.  It  is  the  work  of  a  well-trained  mind, 
which  possessed  thorough  literary  culture.  His  formid- 
able array  of  facts  compelled  respectful  hearing  by  the 
critics  of  his  time. 

Brief  attention  will  be  given  to  certain  economists 
who  only  incidentally  considered  rent.  It  is  not  within 
our  province  to   review  Due,   Vail,   Potter,   Opdyke,  '* 

■'^Ib.,   125-126. 

'*  In  his  treatise  on  Political  Economy,  he  argues  to  jnstify  private 
property  in  land  (Pt.  II,  Chaps.  2,  3).  His  economy  is  an  art  rather 
than  a  science.  He  objects  to  the  economy  of  J.  S.  Mill  because  his  work 
is  a  product  "of  one  who  has  been  reared  and  educated  under  political 
institutions  different  from  ours,  .  .  .  What  we  repxiblicans  need, 
is  a  system  of  political  economy  in  perfect  harmony  with  the  other  por- 
tions of  our  political  edifice."  (Pref.,  v.)  He  does  not  give  a  treatise 
on  rent.  The  purpose  and  content  of  his  book  are  expressed  in  his  own 
words  as  follows:  "The  present  brief  treatise  originated  in  an  effort 
to  ascertain  the  true  commercial  policy  of  our  country.  That  effort  was 
commenced  some  years  ago,  and  was  first  directed  to  an  examination 
of  the  arguments  presented  in  favor  of  the  protective  system  and  the 
revenue  system."      (Pref.,  iii.) 


OTHER    NATIONAL    ECONOMISTS  45 

and  Mathew  Carey,  who,  although  they  were  prominent 
economic  writers,  left  no  theories  of  rent.  Nathaniel  A. 
Ware  (born  in  South  Carolina,  1780,  died  in  Texas, 
1854)  was  a  lawyer,  and  for  a  time  secretary  of  the 
territorial  government  at  Natchez,  Mississippi.  He 
travelled  extensively,  making  a  study  of  botany,  geog- 
raphy, and  the  natural  sciences.  He  wrote  on  the  Fed- 
eral Constitution  and  on  political  economy.  ^^  Ware, 
like  the  authors  above  reviewed,  was  a  national  econo- 
mist. His  book  was  a  defense  of  protection.  Radical 
statements,  peculiar  ideas,  and  rash  criticisms  are  char- 
acteristic of  his  writings.  He  conceived  political  econ- 
omy as  an  art  rather  than  as  a  science.  "Government 
by  circumstances  is  the  golden  rule  in  political  economy. 
I  would  lay  down  this  rule  or  maxim  as  the 
only  one  in  this  science."  ^* 

On  population.  Ware's  ideas  are  an  admixture.  "It 
is  important  to  have  a  full  and  efficient  population  in 
all  countries,  for  the  defense,  wealth,  and  refinement 
that  ought  to  accompany  every  government  or  associa- 
tion of  the  human  family."  ^^  "New  countries,"  said  he, 
"with  an  abundance  of  land,  and  not  a  surplus  of  labor, 
ought  to  encourage  the  increase  of  population  in  every 
way  within  their  reach,  both  by  a  native  growth  and 
an  immigration."  '*  He  further  said,  "The  natural  check 
and  limitation  to  an  increase  of  population  is  the  capac- 
ity of  the  earth  to  support  and  feed  it.  To  this  point 
it  tends,  and  nothing  in  the  end  can  prevent  its  reaching 
this  maximum."  ^^ 

Like  Raymond,  he  considers  pride  a  check  to  over- 
population.    Where   pride   is   wanting,   he   would  with- 

''^  Harper's  Encyc.     TJ.  S.  Hist.,  X   (no  paging). 

''•Ware,    Notes,   3. 

"Ware,   Notes,  246. 

™/6.,   247. 

»»7&. 


46  THE   RICARDIAN    RENT    THEORY 

hold  licenses  from  marriage,  and  declare  "illegal  all 
marriages  without  them  and  deny  to  the  parents  the 
right  of  citizen,  and  to  the  offspring  the  rights  of  legiti- 
macy." *°  Humanity  aside,  he  would  have  society  to 
"kill  off"  those  who  are  reduced  to  beggary.  "The 
moment  an  individual  is  base  and  mean  enough  to  beg, 
or  avail  himself  of  public  charity,  unless  in  the  shape  of 
a  hospital,  he  is  totally  worthless  and  sunk  beyond  all 
remedy.  There  is  no  foundation  in  his  case  left  upon 
which  to  build  him  up,  no  pride,  no  self-esteem,  no  ambi- 
tion— in  short,  the  person  is  not  a  man  but  sunk  to 
the  level  of  the  brute ;  not  a  biting  or  a  venomous  brute, 
but  a  mere  eating  brute.  Humanity  aside,  it  would  be 
to  the  interest  of  society  to  kill  off  all  such  drones,  get 
rid  of  such  excrescences,  and  cast  off  such  burdens."  ^^ 
He  cannot  be  said  to  offer  a  theory  of  rent ;  but,  upon 
the  problem  of  returns  from  land,  he  shows  a  most 
unbridled  optimism.  "The  capacity  of  the  earth,"  said 
he,  "to  sustain  population  scarcely  knows  any  limit, 
If  the  sort  of  improvement  be  made  that  will 
control  moisture,  make  at  will  manure,  or  apply  chemi- 
cal stimulus  to  plants,  and  give  to  them  certainty,  every 
rood  will  not  only  sustain  its  man  but  its  ten  men.  Ex- 
periments show  the  practicability  of  fifteen  hundred 
bushels  of  Irish  potatoes  to  the  acre ;  and,  with  certainty, 
that  is  the  food  of  forty-five  persons  for  a  year,  in  the 
last  resort.  And  at  that  rate  the  world  is  not  yet  the 
ten-thousandth  part  up  to  its  capacity  to  sustain  life."  ^^ 
Evidently  Ware  was  not  in  harmony  with  the  Maltho- 
Ricardian  theory. 

John   Rae,  though  one   of  the   ablest   economists  of 
his  time,  wrote  nothing  on  the  population-rent  problem. 

«»7&.,  248.       «/&.,  195.      82  7&.,  249, 


OTHER    NATIONAL    ECONOMISTS  47 

The  following  brief  note  gives  his  attitude  toward  Mal- 
thusianism :  "The  laws  of  true  inductive  science  are 
of  universal  application  and  admit  of  no  exceptions. 
If  even  a  single  manifest  exception  occurs,  it  ought  to 
invalidate  the  law.  .  .  ,  Considered  in  this  way, 
the  laws  of  population  as  expounded  by  Malthus  will 
be  found  to  fail."  '"^ 

Rae's  basis  of  thought  is,  it  seems,  that  man  is  an 
animal  and  more.  As  animal  he  must  more  than  repro- 
duce himself,  else  accidents  would  destroy  the  race.  Like 
lower  animals,  he  is  led  by  instinct  to  propagation.  He 
is  more  than  animal  in  that  he  knows  the  result  of  his 
act,  and  that  his  dread  of  results  causes  him  to  refrain 
or  to  negative  them.  "For,"  he  says,  "the  reason  that 
man  is  more  than  animal,  therefore,  to  increase,  or  to 
merely  preserve,  the  numbers  of  any  society,  it  is  neces- 
sary that  there  exist  an  effective  desire  of  offspring."  ^* 

Calvin  Colton  (1789-1857)  is  to  be  classified  with  the 
national  economists.  He  was  a  scholarly  man  and  a 
voluminous  writer  on  protection.  He  was  graduated 
at  Yale  in  1812  and  at  Andover  Theological  Seminary 
in  181 5,  at  which  date  he  entered  the  ministry.  After 
eleven  years,  he  gave  up  preaching  because  of  voice- 
failure.  He  went  to  England  as  a  correspondent  for 
The  Nezv  York  Observer;  and,  after  his  return  to  this 
country,  he  distinguished  himself  as  a  writer  of  political 
tracts  which  advocated  the  principles  of  the  Whig  party. 
He  edited  The  True  Whig  for  two  years  after  1842; 
and  in  1848,  he  published  his  large  treatise,  Public  Econ- 
omy for  the  United  States.  At  the  age  of  sixty-three, 
he  became  professor  of  political  economy  at  Trinity 
College  at  Hartford,  Connecticut.  ^^ 

*3Rae,  The  Sociological  Theory  of  Capital,  354.        ^*  lb.,  356. 
*®AppIeton's  Encyc,  of  Amer.  Biog.,  I,  695. 


48  THE    RICARDIAN    RENT    THEORY 

His  book  may  be  described  as  an  elaborate  defense 
of  the  protective  tariff.  He  uses  the  same  argument  as 
did  Professor  Bowen  at  a  later  date,  to  justify  the  con- 
tention that  political  economy  is  not  a  science  but  an 
art,  and  that  different  states  of  society  require  dift'erent 
economic  policies.  ®'* 

He  dismisses  the  rent  problem  with  the  statement  that 
America  has  no  landlord  class,  and  that,  as  a  conse- 
quence, a  consideration  of  rent  would  be  irrelevant  to 
an  American  political  economy.  ^^ 

He  seems  not  to  have  understood  Malthus*  theory  of 
population ;  and,  taking  the  theological  point  of  view, 
he  speaks  of  it  as  a  "libel  on  Providence — a  very  grave 
and  impious  one."  Being  shocked  at  the  impudence  of 
the  Free  Trade  School,  who  "in  the  face  of  man  and 
heaven"  declare  this  doctrine  of  "iron  despotism,"  he 
lays  on  humanity  any  fault  there  may  be  respecting  over- 
population, and  assumes  that  the  goodness  of  Providence 
will  protect  us.  ^^ 

The  writers  mentioned  in  the  latter  part  of  this  chap- 
ter might  well  have  been  eliminated  from  our  study  on 
the  ground  that  they  wrote  little  on  the  subject,  that 
they  made  no  contribution  to  the  solution  of  the  rent 
problem,  and  that  they  were  unappreciative  of  the  prin- 
ciples they  were  condemning.  As  writers  on  economic 
questions,  however,  they  were  influential  in  shaping  pub- 
lic opinion,  and,  in  turn,  they  reflected  contemporary 
opinion.  Had  they  been  academic  men,  it  is  likely  that 
their  thought  would  have  been  gleaned  from  the  leading 
English  texts.  But  they  were  of  the  people,  and  no 
impress  of  the  prevailing  Maltho-Ricardian  thought  pre- 
vented their  expressing,  more  or  less  inadequately, 
American  public  opinion  on  the  population-rent  problem. 

89Colton,  Public  Economy,  27.       ^  lb.,   Chap.   X.      ^  lb.,  159. 


OTHER    NATIONAL    ECONOMISTS  49 

The  early  national  economists  just  reviewed  should 
be  judged  in  the  light  of  the  conditions  surrounding 
them.  Their  desire  for  a  rapid  increase  in  the  popula- 
tion was  wholly  defensible.  The  best  thought  of  our 
day  cannot  agree  with  their  reasoning  on  the  subject, 
nor  can  it  agree  with  the  English  theory  which  they 
opposed.  The  tendency  of  numbers  to  multiply  and  the 
checks  operating  against  that  tendency  are  working 
toward  a  proportion  and  balance  where  the  numbers  of 
people  will  be  economically  adjusted  to  the  resources 
upon  which  they  must  depend.  The  little  attention  they 
gave  to  land  rent  was  but  incidental  to  their  larger 
thought — that  of  the  development  of  the  national  pro- 
ductive capacity.  Their  definition  of  wealth  as  pro- 
ductive capacity  is  unsuited  to  a  distributive  economy 
such  as  is  engaging  the  attention  of  scholars  today. 
Neither  is  our  definition  of  wealth  as  scarce  goods  suit- 
able for  reasoning  as  to  the  future  strength  and  power 
of  a  state.  It  is  interesting  furthermore  to  note  that 
these  professional  and  educated  men,  writing  with  the 
background  of  practical  experience  rather  than  of  Euro- 
pean custom,  regarded  land  as  capital,  and  rent  as  fixed 
by  the  same  laws  that  govern  wages.  The  group  of 
writers  we  shall  review  in  the  following  chapter  adhered 
to  a  point  of  view  closely  akin  to  that  of  the  classical 
writers  in  England. 


CHAPTER    III 

CLASSICAL  ECONOMISTS  —  McVICKAR, 

COOPER,  NEWMAN,  WAYLAND, 

AND   VETHAKE 

THIS  chapter  will  be  devoted  to  those  early 
American  economists,  who,  on  the  whole,  fol- 
lowed in  the  lead  of  the  British  economists. 
All  of  them  were  college  professors,  highly  educated, 
and  of  solid  merit.  Were  ability  of  authors  rather  than 
differences  in  subject-matter  primary  in  our  classifica- 
tion, at  least  three  chapters  should  be  devoted  to  these 
economists.  But  so  similar  were  their  writings,  and 
so  alike  were  they  to  the  prevailing  viewpoint,  method, 
and  content  of  the  Ricardian  school,  that  to  present  them 
in  different  chapters  would  involve  a  repetition  of  ideas. 
Circumstances  of  profession,  rearing,  and  education 
united  to  divorce  them  from  the  vital  issues,  needs,  and 
public  opinion  of  America.  Not  the  factory  and  the 
farm,  but  the  classroom  and  the  library  were  their 
environment.  On  economics,  little  had  been  done  in 
this  country.  What  had  been  done  could  have  little 
influence  on  these  professors  because  our  writers  were 
on  the  wrong  side  of  the  Atlantic  to  command  the  atten- 
tion of  scholars.  As  in  matters  of  fashion  and  style, 
so  in  questions  of  productive  scholarship,  until  recently, 
Americans  have  patterned  after  England  and  Europe. 
Heavy  teaching  schedules,  interests  primarily  in  fields 
other  than  economics,  wide  separation  from  one  another, 
and  poor  transportation  facilities  denied  to  these  authors 
the  mutual  benefits  of  association. 


JOHN   McVICKAR  5 1 

They  wrote  text  books;  as  professors,  they  reahzed 
the  need  of  concise,  well  written  texts  on  the  elements 
of  political  economy.  And  the  purpose  of  their  efforts 
was  to  meet  this  need.  It  is  natural  that  professors  of 
mathematics  or  moral  philosophy  or  chemistry  or  litera- 
ture, as  we  shall  see  they  were,  should  turn  to  Adam 
Smith,  Say,  Ricardo,  Malthus,  or  McCulloch,  and  eclec- 
tically  formulate  the  principles  of  the  standard  works 
into  suitable  texts.  Leisure  from  a  variety  of  duties 
and  specialized  labor  are  necessary  to  make  contribu- 
tions to  science.  Able  as  they  were,  original  contribu- 
tions to  political  economy  could  not  be  expected  from 
them.     Their  purpose  was  formulation,  not  origination. 

Rev.  John  McVickar  ^  was  the  first  of  these  econo- 
mists. The  son  of  a  well-to-do  merchant,  he  was  born 
in  New  York  city  in  1787.  When  a  mere  boy  of  seven- 
teen years,  he  was  graduated  from  Columbia  College, 
now  Columbia  University.  From  the  date  of  his  gradua- 
tion until  181 1,  he  was  in  England  with  his  father.  Thus 
the  formative  period  of  his  life  was  spent  in  England 
when  economic  questions  were  in  the  vital  air  of  public 
thought.  At  that  time.  Parliament  and  public  opinion 
were  agitated  over  England's  industrial  condition.  Dis- 
cussions and  conditions  that  were  shaping  the  thought 
of  Malthus,  Ricardo,  James  Mill,  and  McCulloch,  were 
of  the  environment  in  which  young  McVickar's  forma- 
tive period  was  spent. 

Upon  his  return  to  this  country,  he  married  into  a 
wealthy  family,  became  a  preacher,  and  devoted  his 
energies  to  the  teaching  of  literature,  moral  philosophy, 
and  economics  in  Columbia.  This  stay  in  England,  when 
we  consider  the  economic  conditions  which  then  existed 

1  Nat.  Encycl.  Amer.  Biog.,  VI,  347. 


52  THE    RICARDIAN    RENT    THEORY 

in  that  country  and  the  period  of  McVickar's  Hfe  when 
there,  must  have  largely  directed  the  formation  of  his 
ideas  on  economics.  Freed  from  the  necessity  of  hav- 
ing to  acquire  a  livelihood,  and  devoted  to  a  profession 
which  removed  him  from  personal  touch  with  the  eco- 
nomic conditions  of  this  country,  he  spent  the  com- 
paratively little  time  that  he  gave  to  this  subject  in  teach- 
ing the  so-called  Classical  economics.  He  wrote  a  primer 
or  text  for  common  schools  which  did  not  take  up  the 
rent  problem.  His  chief  service  was  the  editing  of 
McCulloch's  encyclopedic  article  on  Political  Economy.^ 

In  this  edition,  McVickar  makes  a  note  to  the  effect 
that  the  cultivation  of  inferior  soils  is  not  the  cause  of 
higher  prices,  but  rather  that  high  prices  cause  the  cul- 
tivation of  inferior  soils.  ^  He  did  not  develop  the  point, 
and  evidently  did  not  recognize  that  in  this  statement  is 
a  truth  so  significant  as  to  demand  a  re-examination  of 
the  whole  labor-cost  theory  of  value.  He  considered 
satisfactory  and  conclusive  McCulloch's  repetition  of 
Ricardo's  dictum  that  "corn  is  not  high  because  a  rent 
is  paid,  but  a  rent  is  paid  because  corn  is  high."  * 

Evidently  Professor  McVickar  used  this  work  as  a 
text ;  ^  and,  in  the  introduction  of  his  lectures,  Pro- 
fessor Cooper  said  he  used  it  as  a  text  in  South  Carolina 
College.  Cooper  said  of  the  work,  "Mr.  McCulloch's 
Outlines  of  Political  Economy,  first  published  in  the  sup- 
plement to  the  Bdinburgh  Encyclopedia,  has  lately  been 
published  at  New  York,  at  the  expense  of  James  Wads- 
worth,  Esq.,  of  the  Genesee  County,  with  some  very 
useful  notes  by  the  Rev.  Mr.  McVickar,  and  which  I 
think  the  best  text  book  that  at  present  I  can  recom- 

2  McVickar's  notes  appended  to  this  article  show  him  strictly  in  har- 
mony with  the  ideas  of  McCulloch. 

8  McVickar,   edition   of  McCulloch,  125. 

^Ib.,  121,   122,  and  note. 

^  North  Amer.  Rev.,  XXV,  113. 


THOMAS   COOPER  53 

mend.  The  treatise  on  political  economy,  second  edition, 
by  James  Mill,  Esq.  (a  masterpiece  of  close  and  logical 
reasoning)  has  not  yet  been  republished  among  us."  * 

This  strong  recommendation  of  McCulloch  and  praise 
for  James  Mill  inform  us  at  once  that  Professor  Cooper 
shared  with  Professor  McVickar  a  high  regard  for  the 
Classical  Economists.  Cooper  was  a  man  of  influence 
and  power,  who,  in  many  respects,  was  the  most  note- 
worthy character  we  have  to  review.  Ahvays  he  had 
the  courage  of  his  convictions,  and  he  was  a  fighter  who 
never  feared  trouble.  As  defender  of  Malthus  on  pop- 
ulation and  of  Ricardo  on  rent,  he  met  with  both  extrav- 
agant praise  and  violent  criticism.  In  his  defense  of 
the  freedom  of  trade,  he  was  fearless,  outspoken,  dog- 
matic, hypercritical,  and  radical  in  the  extreme.  The 
stand  he  took  on  political  questions  in  England  caused 
Edmund  Burke  to  single  him  out  for  a  special  attack 
in  Parliament.  He  replied  with  the  vigor  of  a  Spartan; 
soon,  however,  he  was  driven  from  the  country.  In  the 
memorable  days  of  John  C.  Calhoun,  intense  excitement 
was  produced  by  the  rare  powers  and  great  learning  of 
Cooper  in  favor  of  nullification.  Indeed,  he  was  the 
radical  of  the  radicals  in  the  state  of  South  Carolina. 
In  this  connection.  Professor  J.  W.  Burgess  has  char- 
acterized him  as  the  notorious,  if  not  famous,  British 
president  of  South  Carolina  College;  and  as  a  keen  and 
vigorous  thinker.  Because  of  his  bold  stand  on  economic 
questions,  he  was  made  by  Friedrich  List  the  subject  of 
numerous  attacks  and  harsh  criticisms.  '^  On  the  con- 
trary, and  naturally  too,  McCulloch  praised  his  book  as 
the  best   in   America.      I   may  be  pardoned   for   giving 

« Cooper,  Lectures,  ed.   of  1826,   13-14. 

T  Hirst,  Life  of  Friedrich  List,  42,   111,   117,   150,   160,   161,   172,   215, 
235,  263,  283. 


54 


THE    RICARDIAN    RENT    THEORY 


some  extra  space  to  the  presentation  of  his  environment, 
education,  and  career,  because  the  principles  of  his  eco- 
nomics are  so  in  harmony  with  the  circumstances  of  his 
hfe. 

Dr.  Thomas  Cooper  (1759-1840)  was  born  in  Lon- 
don, and  died  in  Cohimbia,  South  CaroHna.  He  was 
educated  at  Oxford,  where  he  became  proficient  in  chem- 
istry, and  acquired  a  knowledge  of  medicine,  law,  and 
political  economy.  He  and  James  Watt  were  friends 
and  active  members  in  the  Democratic  Club  of  Man- 
chester. 

A  threat  of  prosecution  was  brought  against  him  for 
the  publication  of  a  pamphlet  in  reply  to  Burke's  Re- 
flexions on  the  Revolution  in  France.  With  Watt,  he 
went  to  Paris,  became  intimate  with  the  leaders  of  the 
Revolution,  and  offered  himself  as  a  candidate  for  a 
seat  in  the  Convention,  opposing  the  Duke  of  Orleans. 

Coming  to  the  United  States  at  the  age  of  thirty-six, 
he  settled  in  Northumberland,  Pennsylvania,  where  his 
father-in-law,  Joseph  Priestly,  was  residing.  Only  four 
years  elapsed  before  his  presence  was  made  known  in 
this  country  through  his  espousal  of  Jeffersonian  democ- 
racy and  his  bitter  attack  on  the  administration  of  John 
Adams,  for  which,  one  year  later,  he  was  fined  $400 
and  sent  to  prison  under  the  Alien  and  Sedition  Acts. 
He  later  declared  the  acts  unconstitutional,  won  his 
point,  and  secured  a  return  of  his  money  with  interest. 
Upon  his  release  from  prison,  he  became  land  commis- 
sioner, and  a  judge  of  the  common  pleas.  Not  lang 
afterward,  however,  the  Senate  impeached  him  for  over- 
bearing conduct,  and  Governor  Snyder  removed  him 
from  office.  ^ 

8  After  Cooper's  death  in  1839,  his  entire  collection  of  letters  and 
personal  papers  passed  to  Dr.  Jolin  Manners,  who  prepared  a  two  or 
three    volume    work   in    commemoration    of    Cooper,    but   he    could    find    no 


THOMAS   COOPER  55 

He  then  turned  to  college  work.  He  became  professor 
of  chemistry  in  Dickinson  College ;  later  he  accepted 
the  chair  of  chemistry  and  mineralogy  in  the  University 
of  Pennsylvania.  In  1817,  he  became  professor  of  chem- 
istry and  law  in  the  University  of  Virginia;  two  years 
later,  the  subjects  of  mineralogy  and  natural  philosophy 
were  added  to  his  labors.  Three  years  after  he  entered 
this  university,  agitation  arose  on  account  of  his  hetero- 
doxy, which  caused  him  to  resign. 

In  1820,  he  moved  to  South  Carolina,  was  elected 
professor  of  chemistry,  and,  one  year  later,  the  presi- 
dent of  South  Carolina  College.  While  there,  he  taught 
literature  and  lectured  on  political  economy  in  addition 
to  his  other  labors.  But  he  was  not  free  from  trouble. 
Because  of  his  radical  religious  teachings,  he  was  tried 
in  1832  before  the  Board  of  Trustees,  but  was  acquitted. 
Pressure  upon  him  was  such,  however,  that  he  resigned 
from  the  college  in  1833  and  devoted  the  rest  of  his 
life  to  the  editing  and  publishing  of  the  statutes  of  the 
state.  ^ 

The  bitter  opposition  and  intense  excitement  in  South 

publisher  for  it.  This  material  passed  to  Mistress  Ellen  Cooper  Hanna, 
then  to  Mistress  Fanny  Cooper  Lesesne,  the  last  living  at  Battles  Wharf, 
Baldwin  County,  Alabama.  During  the  war,  the  material  was  destroyed 
(Southern  Historical  Association,  II,  339).  A  small  collection  of  material 
on  Dr.  Cooper's  life  was  donated  to  South  Carolina  University  in  1907 
{lb.  342).  See  letters  of  Dr.  Thomas  Cooper,  1825-1832,  American  His- 
torical  Review,  VI,   725-736. 

^  Nat.  Ency.  Am.  Biog.,  XI,  31.  Numerous  encyclopedia  articles  and 
works  of  reference  give  his  career.  The  reference  just  cited  gives  a 
short,  but  excellent  account  of  him.  Palgrave's  Dictionary,  I,  408,  de- 
scribes his  life.  But  the  best  account  I  have  found  of  his  career  appears 
in  the  History  of  South  Carolina  College,  Chap.  VIII.  President  J.  W. 
Rivers,  speaking  before  the  National  Educational  Association  at  Balti- 
more, in  presenting  the  history  of  South  Carolina  College,  said,  "Under 
the  second  president.  Dr.  Thomas  Cooper,  special  attention  was  directed 
to  physical  science.  Educated  at  Oxford,  England,  and  having  been 
an  associate  of  Priestly  and  a  professor  of  chemistry  and  mineralogy  at 
the  University  of  Pennsylvania,  Dr.  Cooper  brought  with  him  an  enthusi- 
astic devotion  to  this  department,  and  gave  it  prominence  not  only  in 
the  college  but  in  the  state.  IJnfortunately,  after  being  many  years 
president,  he  busied  himself  with  infidel  speculation,  and  on  this  account, 
notwithstanding  his  great  learning  and  ability,  brought  the  college  to  the 
brink  of  ruin"  {The  News  and  Courier,  Charleston,  S.  C,  Tues.,  July  25, 
1876). 


56  THE    RICARDIAN    RENT    THEORY 

Carolina  against  the  tariff  of  1827  is  well  known.  The 
history  of  nullification  in  that  state  begins  with  that 
opposition.  The  great  power  of  Thomas  Cooper  was 
exemplified  in  that  opposition.  To  quote  Professor  J.  W. 
Burgess,  "The  chief  personages  of  the  Commonwealth 
assembled  at  Columbia  [in  the  summer  after  the  Con- 
gressional session  of  1826-1827].  ^°  The  principal  orator 
of  the  occasion  was  the  president  of  the  college  of  the 
Commonwealth,  Dr.  Cooper,  a  man  of  rare  powers  and 
great  learning,  an  Englishman  by  birth  and  education, 
a  free  trader  in  his  political  economy,  and  a  'States' 
rights'  man  in  his  political  science.  In  his  speech  he 
suggested  disunion  as  preferable  to  submission  to  the 
tariff  legislation  of  Congress."  ^^  As  a  result,  they 
adopted  a  resolution  that  was  inflammatory,  though  not 
so  much  so  as  was  the  professor's  speech. 

Indirectly,  Cooper's  influence  seems  to  have  been  felt 
in  the  national  Congress.  It  was  claimed  that  the  tariff 
belonged  to  the  domain  of  the  Ways  and  Means  Com- 
mittee of  which  George  McDuffe  of  South  Carolina 
was  Chairman.  McDuffe  was  a  leader  of  men.  Keen 
intelligence,  strong  courage,  and  great  prestige  were  his. 
As  is  well  known  by  those  who  have  read  his  speeches, 
he  based  his  arguments  for  the  freedom  of  trade  upon 
the  Ricardian  theory  of  rent.  Professor  Burgess  is  au- 
thority for  the  opinion  that  McDuffe  learned  much  of 
his  political  economy  from  Professor  Cooper,  who  "set 
the  direction  of  thought  upon  such  subjects  in  South 
Carolina  and  throughout  a  large  portion  of  the  South 
during  that  period."  ^^  Speaking  further  of  Cooper's 
prestige,  Professor  Burgess  said,  "A  true  estimate  of 
responsibilities  for  the  events  of  1832  in  South  Carolina 

*"  Parenthesis  mine. 

"Burgess,  The  Middle  Period,  159.      i- 7&.,  172-173.      Quotation,   173. 


THOMAS   COOPER  57 

would  probably  hold  him  more  culpable  than  Calhoun 
himself."  '' 

Professor  Cooper  wrote  his  Lectures  on  (the  Elements 
of)  Political  Economy  when  he  was  sixty-seven  years 
of  age.  Considering  the  circumstances  of  his  education 
and  his  maturity  when  he  came  to  this  country,  together 
with  the  fact  that  his  teaching  was  largely  confined  to 
the  subjects  of  natural  science,  there  is  little  wonder 
that  his  lectures  can  claim  the  merit  of  but  little  orig- 
inality. The  author  says,  "that  he  writes  not  for  the 
adept.  It  was  his  business  to  introduce  the  pupils  under 
his  care  to  a  full  knowledge  of  the  science  in  all  its 
departments ;  and  he  hesitated  not  to  gather  his  materials 
from  every  quarter,  where  they  most  advantageously 
presented  themselves  to  his  view,  without  always  trying 
to  throw  over  them  an  air  of  novelty,  and  sometimes 
without  even  changing  the  language  of  the  author  to 
whom  he  stood  indebted,  when  it  appeared  to  him  to 
express  the  reasoning  and  the  principles  clearly  and 
forcibly."  " 

In  the  first  year  of  his  lectures,  he  used  Mistress 
Marcet's  Conversations,  and  McVickar's  republication 
of  McCulloch.  He  advised  those  who  wished  to  pursue 
the  subject  farther  to  read  Adam  Smith,  Say,  Mai  thus, 
Ricardo,  McCulloch,  James  Mill,  and  Cardozo.  He  indi- 
cates that  these  were  the  sources  from  which  his  lectures 
were  prepared.  ^^ 

Professor  Cooper  was  an  indefatigable  worker 
whether  on  chemistry,  medicine,  law,  agriculture,  re- 
ligion, or  political  economy.  His  writings  refer  to  numer- 
ous sources.  For  instance,  on  population,  which  we 
will  now   consider,   he  referred  to,   and  evidently  had 

"/&.,  173. 

1*  North  Amer.   Eev.,   XXV,   409,    and   Cooper,   Lectu/res,   Pref.   v-vi. 
^^  Cooper,  Lectures,  3d  ed.,  Pref.,  v-vi. 


58  THE    RICARDIAN    RENT    THEORY 

read,  Malthus,  Godwin,  Wayland,  Jarrold,  Graham, 
Ensor,  Grey,  Everett,  Herbert,  ^^  Wallace,  Darwin,  and 
Townsend.  ^' 

His  attitude  toward  Malthusianism  is  easy  to  ascertain. 
He  gives  a  concise  statement  of  the  doctrine,  and  con- 
cludes with  these  words:  "Dr.  Malthus  has  incurred 
much  obloquy  for  these  harsh  doctrines;  but  their  man- 
ifest truth  and  great  importance  have  at  length  pro- 
duced conviction  in  the  minds  of  the  greater  number 
of  those  who  have  turned  their  attention  to  political 
economy;  and  they  may  now  be  considered  as  settled."  ^® 

Referring  to  the  claim  of  Malthus  that  population 
increases  in  a  geometrical  ratio  while  food  increases 
only  in  an  arithmetical  ratio,  he  said,  "this  being  an 
undeniable  matter  of  fact,  may  be  assumed  as  such  to 
form  the  basis  of  any  reasoning."  ^^ 

Contrary  to  Raymond,  Everett,  and  Cardozo,  he 
taught  that  to  the  returns  of  machinery  "there  must  be 
a  term  where  it  ends — a  maximum."  -" 

As  above  noted,  Everett  makes  much  of  the  point 
that  population  is  not  supported  from  the  same  soil 
that  it  occupies.  In  reply  to  this  Cooper  said,  "What 
may  be  affirmed  of  any  given  quantity  of  land  in  this 
respect  [referring  to  the  law  of  diminishing  returns]  ^^ 
may  be  affirmed  of  any  other,  and  therefore  of  all: 
therefore,  the  proposition  is  general,  that  population 
tends  to  accumulate  much  faster  than  the  means  of  sub- 
sistence, upon  a  limited  territory."  -^ 

Cooper  adhered  to  the  wage-fund  doctrine  in  its  true 

«/b.,  1st  ed.,  232. 

"lb.,   11. 

18/6.,  11,  12.     Qnotation  12. 

i»7b.,  232. 

20 /b.,   233. 

^  Parenthesis  mine. 

"  Cooper,  Lectures,  1st  ed.,  233. 


SAMUEL    PHILLIPS    NEWMAN  59 

sense,"  and  not  as  it  is  doctored  up  and  explained  away 
by  certain  later  writers.  With  this  deficient  weapon, 
he  made  an  attack  upon  Everett's  New  Ideas,  which 
claimed  that  an  increase  of  population  is  a  cause  of 
abundance.  "*  His  theory  of  rent  is  but  a  restatement  of 
Ricardo's  theory,  so  it  would  be  but  a  repetition  to  give 
it  here.  "^ 

Like  McVickar  and  Cooper,  our  next  author,  Samuel 
Phillips  Newman  (1797-1842),  was  a  professor  whose 
interests  were  mainly  in  subjects  other  than  political 
economy.  He  was  the  son  of  a  minister,  a  graduate  at 
Harvard  (1816)  and  at  Andover  Theological  Seminary. 
He  was  himself,  like  McVickar,  a  minister.  After  teach- 
ing at  Bowdoin  for  fourteen  years,  he  became  principal 
of  the  State  Normal  School,  Barre,  Massachusetts, 
where  he  remained  from  1839  to  his  death.  -** 

His  special  interest  was  in  English,  which  he  taught 
and  upon  which  he  wrote  several  works.  While  at  Bow- 
doin (1835),  however,  he  gave  lectures  and  wrote  a 
text  on  the  elements  of  political  economy.  The  Wealth 
of  Nations  seems  to  have  been  almost  his  only  source,, 
and  where  he  departs  from  it,  confusion  and  contradic- 
tion render  the  following  out  of  his  reasoning  a  hope- 
less task. 

He  superficially  disposes  of  the  population  problem 
as  follows :  "The  period  when  the  surface  of  the  earth 
shall  be  so  covered  with  inhabitants  that  population 
shall  equal  the  means  of  subsistence,  is  so  distant,  and 
all  calculations  and  reasonings  relating  to  this  state  of 
things  so  indefinite  and  shadowy,  that  the  whole  sub- 
ject is  one  of  no  practical  importance."  -^ 

23/6.,   239.       '*Ib.,  236-237.        -^  Ih..   3  3,   32-33,   84-87,   221. 
""  Appleton's  Encyc.  Am.  Biog.,  IV,  505. 
^^  Newman,  Elements,  2."4. 


6o  THE    RICARDIAN    RENT    THEORY 

He  speaks  of  rent  only  in  connection  with  land.  His 
theory  is  simple :  products  minus  costs  equal  rents.  ^* 
Like  Adam  Smith,  he  thinks  that  rent  enters  into  price. 
Wages,  payments  for  capital,  and  rents,  he  makes  the 
cost  items  entering  into  the  price  of  agricultural  com- 
modities. -^ 

A  professor  of  English  in  a  country  where  there  ex- 
isted no  rent  problem,  at  least  in  its  political  aspects,  is, 
of  course,  not  supposed  to  give  the  rent  problem  serious 
consideration.  He  was  yet  in  his  thirties  when  he  wrote ; 
and  want  of  time,  his  environment,  and  professional  du- 
ties permitted  him  no  more  than  a  passing  consideration 
of  economic  questions.  His  book  is  little  more  than  a 
compendium  of  ideas,  somewhat  ill-digested,  gained  from 
a  reading  of  The  Wealth  of  Nations. 

Next  in  order  of  consideration  is  Francis  Wayland 
(1796-1865).  His  parents  were  natives  of  England, 
who  came  to  the  United  States  in  1792,  four  years 
before  Francis  was  born.  The  father,  a  Baptist  min- 
ister, was  away  from  home  much  of  the  time.  The 
son  received  his  early  training  from  his  mother,  "a 
woman  of  superior  mind  and  discriminating  judg- 
ment." ""  He  was  graduated  at  Union  College  at  the 
age  of  seventeen,  studied  medicine  for  three  years,  and 
entered  Andover  Theological  Seminary  in  1816.  He  left 
the  seminary  to  become  a  tutor  in  Union  College.  After 
four  years  of  service,  he  accepted  the  pulpit  of  the  First 
Baptist  Church  in  Boston.  In  1823,  he  became  famous 
as  a  preacher.  He  accepted  a  professorship  at  Union 
(1826-1827),  but  resigned  before  the  end  of  the  year 

=»/&.,   275.       ^  lb.,    127. 

soGood  brief  referonoes  on  Wayland's  life  are:  Appleton's  Encyc.  Amer. 
Biog.,  VI,  397-398;  New  Jvter.  Encyc,  XX,  377-378;  Palgrave's  Diet., 
Ill,  660;  Memoir  of  the  Life  and  Labors  of  Francis  Wayland  by  his 
sons.     The  last  named  is  particularly  valuable. 


FRANCIS    WAYLAND  6l 

to  become  the  fourth  president  of  Brown  University, 
where  he  served  for  twenty-eight  years.  His  adminis- 
tration has  been  called  the  Golden  Age  of  the  University. 
At  the  age  of  fifty-nine,  he  resigned  to  become  the  pastor 
of  the  First  Baptist  Church,  Providence,  Rhode  Island, 
and  to  devote  himself  to  prison  reform  and  other  social 
work. 

Like  the  other  professors  under  review,  he  was  not 
primarily  an  economist.  He  wrote  nineteen  books  on 
as  many  subjects,  besides  numerous  pamphlets  and  news- 
paper articles.  His  Elements  of  Political  Economy 
(1837)  was,  as  a  text,  the  best  work  previous  to  the 
Civil  War,  and  probably  as  popular  as  any  American 
text  on  this  subject.  It  survives,  and  is  used  as  a  text 
in  some  places  to  this  day.  Before  1867,  as  many  as 
50,000  copies  of  his  larger  treatise  and  12,000  of  his 
smaller  had  been  sold.  ^^ 

Professor  Dunbar  said,  "President  Wayland's  book 
(1837)  is  the  only  general  treatise  of  the  period  which 
can  fairly  be  said  to  have  survived  to  our  day;  and 
this,  it  must  be  admitted,  owes  whatever  value  it  has 
to  its  manner  of  presenting  for  easy  comprehension 
some  of  the  leading  English  doctrines,  of  which,  how- 
ever, it  may  be  doubted  if  the  author  ever  fully  recog- 
nized the  bearing."  ^-  The  author's  own  statement  that 
when  his  "attention  was  first  directed  to  the  science  of 
political  economy,  he  was  struck  with  the  simplicity  of 
its  principles,"  ^^  bears  evidence  for  Professor  Dunbar's 
statement.  Ricardo  had  a  different  experience.  It  was 
after  Ricardo  had  produced  his  great  work  that  he  con- 
fessed his  inability  to  find  his  way  through  the  "laby- 
rinth" of  the  value  problem.     Our  author  said,  "Cost, 

^^  Wayland  and  Wayland,  Memoir,  I,  389. 

22  Dunbar,  Essays,   12. 

33  Wayland,  Elements,  Pref.,  iii. 


62  THE    RICARDIAN    RENT   THEORY 

that  is,  labor  bestowed,  is  the  foundation  of  exchangeable 
value."  ^*  But  he  makes  the  one  most  important,  and 
all  pervading  principle  of  his  work  the  law  of  supply 
and  demand.  He  classifies  land  as  capital,  ^^  speaks  of 
rent  as  interestj^®  makes  the  lower  margin  to  depend 
on  price  rather  than  the  reverse,  ^^  and  teaches  that 
rent  enters  into  price.  ^* 

How  can  one  maintain  these  principles  and  still  hold 
to  the  Ricardian  theory  of  rent?  H  one  turns,  however, 
to  his  chapter  on  rent,  it  is  at  once  apparent  that,  so  far 
as  the  description  of  the  doctrine  goes,  he  out-Ricardos 
Ricardo  himself. 

His  treatment  of  the  principle  of  population  may  be 
expressed  thus :  "Population,"  he  says,  "always  follows 
capital.  It  increases  as  capital  increases;  is  stationary 
when  capital  is  stationary;  and  decreases  when  capital 
decreases.  And  hence,  there  seems  no  need  of  any 
other  means  to  prevent  the  too  rapid  increase  of  popu- 
lation, than  to  secure  a  correspondent  increase  of  cap- 
ital, by  which  that  population  may  be  supported."  ^^ 
On  the  whole,  however,  his  teaching  supports  the  theory 
that  an  increase  of  capital  forms  a  check  to  population 
in  the  form  of  a  higher  standard  of  living. 

Wayland  was  influenced,  evidently,  by  the  Malthusian 
concept  of  the  minimum  of  subsistence  as  the  regulator 
of  population,  and  by  the  American  idea  of  a  growing 
population  causing  an  increase  of  subsistence  at  a  faster 
rate  than  the  increase  of  population.  Unlike  and  con- 
flicting ideas  were  thus  at  the  basis  of  his  reasoning. 

8</&.,  24. 

35/6.,    31. 

»«/b.,  341. 
^  lb. 

^Jb.,   355. 
^Ib.,  305. 


FRANCIS   WAYLAND  63 

Impliedly,  his  capital  fund  is  reduced  to  a  mere  wage- 
fund,  with  the  result  that  population  follows  wages.  *° 
He  does  not  mean  the  rate  of  wages,  for,  ruling  out  com- 
binations either  among  capitalists  or  laborers  as  ex- 
pensive and  unjust,  he  finds  that  competition  brings 
wages  to  their  proper  level.  *'^  The  context  makes  "prop- 
er level"  synonomous  with  Ricardo's  standard  wage.  It 
follows  that  the  increase  of  population,  together  with  the 
force  of  competition  would  tend  to  keep  wages  about 
the  same  through  time.  The  size  of  the  fund,  then, 
rather  than  the  rate  of  individual  wages,  would  be  the 
regulator  of  population.  With  Malthus,  he  teaches  that, 
in  the  United  States,  population  doubles  once  in  twenty- 
five  years.  And,  in  the  same  paragraph,  he,  in  harmony 
with  the  "Early  National  Economists"  we  have  reviewed, 
tells  us  that  the  earth  can  produce  more  than  its  inhab- 
itants consume.  *' 

I  have  said  that  his  opinion  wavered  between  the 
English  and  the  American  ideas  respecting  the  wage- 
fund.  In  brief,  what  were  these  ideas  ?  The  wage- fund 
idea  which  enjoyed  great  vogue  in  English  economic 
literature  was  only  an  assumption.  A  certain  fund  of 
capital,  it  was  assumed,  in  the  hands  of  employers,  was 
set  aside  for  the  express  purpose  of  paying  wages.  Sup- 
pose in  a  given  time  the  fund  to  be  1,000  and  the  num- 
ber of  laborers  100,  then  1,000  -^  100  =  10,  or  the  aver- 
age wage.  The  point  of  emphasis  was  not  productivity, 
or  the  result  of  the  application  of  labor,  but  rather  that 
the  fund  set  aside  was  necessarily  meted  out  to  laborers 
by  the  principle  of  a  simple  division.  The  content  of 
this  fund  was  capital  only. 

Resting  upon  as  superficial  a  basis  and  reflecting  a 

^Ib.,   308. 

^  lb.,   303-304. 

*^lb.,  302. 


64  THE    RICARDIAN    RENT    THEORY 

similar  mode  of  thought,  was  the  subsistence  theory, 
which  looked  not  to  capital  but  to  land  alone  as  the 
determinant  of  wages.  *^ 

This  doctrine  of  a  predetermined  fund  for  wages 
grew  out  of  the  industrial  situation  in  England.  Closed 
in  by  tariff  walls,  the  country  was  dependent  on  the 
annual  crop  for  the  subsistence  of  the  coming  year. 
Close  the  eyes  to  consumers  other  than  laborers,  forget 
that  wages  consist  of  more  than  food,  and  the  idea  of  a 
predetermined  wage-fund  will  result. 

American  economists,  on  the  contrary,  recognized  a 
large  surplus  upon  which  they  could  draw  at  will.  So 
far  as  they  reasoned  upon  a  wage- fund  basis,  they  had 
in  mind  a  concept  so  elastic  as  to  lose  the  nature  of  a 
fund.  Necessities,  in  their  thought,  were  not  produced 
for  but  by  population.  "Population  as  a  cause  of  abund- 
ance" pervaded  their  thought. 

Wayland  could  not  reason  clearly  upon  the  problem 
of  population  because  he  did  not  see  a  difference  be- 
tween these  points  of  view.  The  distinction  between 
static    conditions   and   dynamic   conditions,   he-  did  not 

^  We  must  allow  that  wages  are  paid  out  of  capital,  but  for  this  rea- 
son we  must  not  jump  to  the  rigidity  of  a  wage-fund  theory.  Or  let 
us  grant  the  wage-fund ;  where  does  it  lead  us  ?  Or  how  does  it  aid 
us  in  our  reasoning?  Precisely  the  same  reasoning  holds  for  the  exist- 
ence of  an  interest-fund,  or  of  a  rent-fund,  or  of  any  other  fund,  for 
that  matter. 

But,  it  may  be  asked,  why  object  to  this  theory,  if  it  is  of  no  signifi- 
cance in  itself  ?  It  is  not  always  the  importance  of  a  theory  in  itself 
that  demands  attention ;  its  effect  upon  furthering  or  retarding  other 
ideas  is  the  point  in  question  regarding  the  wage-fund.  Its  effects  in 
the  main,  were  two.  With  a  superficial  analysis  that  took  the  appear- 
ance of  a  truism,  it  glossed  over  and  hid  from  view  the  real  problem 
of  wages,  and  thus  tended  to  remove  it  (the  real  problem)  from  discus- 
sion,  with  the  consequence  of  retarding  the  development  of  thought. 

Of  a  different  nature  was  its  other  effect:  unbending  rigidity  of  the 
fund  gave  an  air  of  justice  to  most  unjust  conclusions.  To  strikes  or 
efforts  on  the  part  of  particular  groups  of  laborers  to  raise  their  wages, 
the  capitalist,  with  the  address  of  a  moralist  and  with  the  sanction  of 
science,  could  object  on  the  ground  that  to  the  extent  some  are  aided 
others  must  suffer.  On  the  same  groiind,  workmen  were  made  dependent 
on  capitalists,  who  were  regarded  by  the  wage-fund  theorists,  as  the  great 
benefactors  of  the  race.  Upon  the  sacrifices  of  laborers  and  the  self 
restraint  of  these  benefieient  capitalists  depended  the  size  of  the  all  im- 
portant wage-fund. 


FRANCIS   WAYLAND  65 

recognize.  Wayland's  economics  was  eclectic.  Odd 
moments  taken  from  the  numerous  cares  of  busy  men 
permit  little  more  than  a  putting  together  eclectically  of 
ideas  from  others.  Wavering  between  American  and 
English  ideas  on  population,  his  lines  of  thought  tended 
in  opposite  directions. 

On  the  rent  problem,  Ricardo's  emphasis  was  upon 
fertility,  while  Thiinen  placed  particular  emphasis  upon 
location.  **  Wayland  correctly  emphasized  equally  both 
points  of  view.  He  said,  "Fertility  being  the  same,  pro- 
ductiveness will  be  as  situation;  and,  situation  being  the 
same,  productiveness  will  be  as  fertility."  *^ 

His  account  of  the  origin,  progress,  and  measurement 
of  rent  is  but  a  repetition  of  Ricardo's  description  of 
rent.  **'  Our  author  gives  a  splendid  and  practical  dis- 
cussion as  to  the  effects  of  transportation,  markets,  and 
climate  on  land  rents.  ■*"  He  shows  how  products  reflect 
a  price  back  upon  land,  but  he  goes  further  to  show  that 
the  price  of  land  is  materially  affected  by  its  beauty  of 
situation  as  well  as  by  the  intellectual  and  moral  char- 
acter of  the  neighborhood.  *^  He  rightly  emphasizes  sit- 
uation in  city  rents ;  as  sites  for  dwellings,  warehouses, 
factories,  manufactures  in  proximity  to  water  falls  and 
the  like.  ^^  The  rent-  of  mines,  he  would  also  have  de- 
pend on  location  as  well  as  on  the  quality  and  workable- 
ness of  the  mine.  ^^ 

Although,  in  respect  to  agricultural  lands,  he  holds 
with  Ricardo  to  the  differential  rent  theory,  he  still 
maintains  that  rent  enters  into  price.     "The  price,"  he 

^Thunen,    Der    isolirte    Staat,    1st    ed.,    182.       (Der   isoUrtc    Stoat    in 
Bezichung  auf  Landivirthschaft  und  Nationalokonomie) . 
^Wayland,   Elements,  340. 
*^Ib.,   340-344. 
^  lb.,  344-348. 
^  lb.,  348-349. 
^  lb.,  350-352. 
.»/&.,  352-353. 


66  THE    RICARDIAN    RENT    THEORY 

said,  "of  a  bale  of  cotton  is  made  up  of  the  rent  of  the 
land  on  which  it  grew,  the  wages  and  expense  of  the 
laborers  who  were  employed  in  its  cultivation,  the  labor 
and  skill  of  the  agriculturalist  who  superintends  the 
labor,  the  cost  of  seed,  manure,  utensils,  etc."  ^^  This 
statement,  however,  does  not  convict  him  of  contradic- 
tion, because  his  emphasis  is  on  the  demand  side,  and 
it  is  consequently  price  that  determines  the  lower  margin 
rather  than  the  reverse.  Marginal  cost,  as  Ricardo  con- 
ceived it,  coincides  with  price ;  but  Wayland's  conception 
is  that  this  margin  is  the  effect  of  price  rather  than  the 
cause  of  price. 

The  influence  of  two  unlike  economics  over  his  mind 
makes  him  hard  to  interpret.  In  seeming  contradiction 
to  what  has  been  said,  he  bases  the  origin  and  progress 
of  rent  on  the  fact  of  poorer  soils  coming  under  cultiva- 
tion ;  ^^  again,  his  assumption  is  that  the  productivity 
of  land  is  a  fixed  number  of  bushels.  ^'  These  assump- 
tions, however,  are  used  in  rather  graphic  illustrations 
and  are  out  of  harmony  with  the  main  tenets  of  his 
argument. 

Now,  if  he  did  hold  to  the  "limited  returns"  concept, 
as  his  illustrations  seem  to  indicate,  he  could  not  teach 
the  tendency  of  population  to  double  "once  in  twenty- 
five  years"  and  that  "the  earth,  every  year,  if  it  be  prop- 
erly tilled,  and  if  capital  be  properly  employed,  pro- 
duces more  than  its  inhabitants  consume."  ^*  He  did 
not  appreciate  the  law  of  diminishing  returns;  and,  on 
the  whole,  he  favored  a  rather  rapid  multiplication  of 
population. 

Following   Wayland's    first   edition   of   the   Elements, 

^^Ib.,  355. 

^^  lb.,  341. 

^  lb.,  88-89. 

^Ib.,  302. 


HENRY    VETHAKE  6/ 

appeared  Vethake's  well  written  Principles  of  Political 
Economy  (1835).  We  have  seen  that  McVickar's  edi- 
tion of  McCulloch  was  used  by  its  editor  in  his  class- 
room. Both  Cooper's  and  Wayland's  books  were  com- 
posed of  lectures  previously  delivered  by  them  to  their 
classes.  And  Vethake  inscribes  his  book,  "To  the  numer- 
ous young  men  who,  at  different  periods  during  the 
last  sixteen  years,  have  attended  his  lectures  on  political 
economy."  ^^  Like  Wayland,  Vethake  was  a  professor 
who  was  not  in  close  touch  with  the  industrial  realities 
of  his  country.  He  was  not  even  an  economist  primarily, 
as  will  be  seen  through  a  brief  review  of  his  career. 

Henry  Vethake  (1792-1866)  was  born  in  Essequibo 
(now  Demerara),  British  Guiana,  and  he  died  in  Phila- 
delphia. When  he  was  four  years  of  age,  his  parents 
moved  to  the  United  States.  At  Columbia  he  took  the 
degrees  A.B.  (1808)  and  A.M.  (1811).  Subsequently 
he  studied  law.  He  was  an  instructor  in  mathematics 
and  geography  in  Columbia  College  in  1813 ;  and,  from 
18 1 3  to  1 82 1,  he  taught  mathematics,  natural  philosophy, 
chemistry,  and  mechanical  philosophy  at  the  College  of 
New  Jersey  (now  Princeton  University).  He  left  that 
post  to  become  professor  of  natural  philosophy  in  Dick- 
inson College,  a  position  which  he  held  from  182 1  to 
1829.  He  was  professor  in  the  University  of  the  City 
of  New  York  (now  New  York  University)  in  the  years 
1832  and  1833,  during  which  time  he  taught  mathe- 
matics and  astronomy.  From  1834  to  1836,  he  was 
Rector  of  the  board  of  trustees  and  President  of  Wash- 
ington College  (now  Washington  and  Lee  University), 
where  he  taught  moral  philosophy  and  mathematics. 
From  there,  he  went  to  the  University  of  Pennsylvania 
as  the  professor  of  moral  philosophy  and  intellectual 

^  Vethake,  Principles,  iii. 


68  THE    RICARDIAN    RENT    THEORY 

philosophy  (1836-1855).  He  was  Vice  Provost  from 
1846  to  1854,  and  Provost  from  1854  to  1859.  He 
became  professor  of  higher  mathematics  at  the  Phila- 
delphia Polytechnical  College  in  1859,  where  he  served 
until  his  death.  He  received  the  honorary  degrees  of 
A.M.  from  the  College  of  New  Jersey  (1816),  the  same 
from  Dickinson  (1827),  and  lyL.D.  from  Columbia 
(1836).  ^« 

The  first  part  of  his  preface  states  his  intention  to 
avoid  reference  to  other  writers.  The  assistance  of  ref- 
erences, however,  is  not  needed  to  show  us  that  in  all 
but  a  few  instances  his  thought  is  the  same  as  that  held 
by  McCulloch.  The  one  author  to  whom  he  inakes  an 
important  reference,  and  that  is  an  extended  one,  is 
McCulloch.  "  The  fact  that  he  edited  McCulloch's  Dic- 
tionary of  Commerce  evidences  further  appreciation  on 
his  part,  of  the  writings  of  that  author.  He  was  a  free 
trader,  ^*  and  his  views  on  international  commerce  are 
little  more  than  a  re-wording  of  Ricardo's  teachings. 

He  thinks  of  the  total  income  as  being  divided  into 
the  three  shares  of  rent,  profits,  and  wages.  By  far 
the  larger  portion  of  the  people  must,  he  teaches,  depend 
on  w^ages  for  support;  therefore  the  great  regulator  of 
population  is  wages.  ^^ 

He  said  that  wages  were  regulated  by  the  law  of  sup- 
ply and  demand,  but  it  was  physical  supply  and  physical 
demand  that  he  had  in  mind.  By  the  supply  of  labor 
he  meant  the  number  of  laborers,  and  the  number  of 
laborers  was  in  proportion  to  the  whole  population.  The 
demand  for  labor  "is  measured  by  that  portion  of  the 
capital  of  a  country  which  consists  of  wages,  and  which, 

^  Palgrrave's  Dictionary,  III,   617-618. 
^Vethake,  Principles,   409-410. 
«8/b.,   Chaps.   II-XIV. 
^  Vethake,  Principles,  99. 


HENRY   VETHAKE  69 

again,  is  proportional  to  the  whole  amount  of  that  cap- 
ital ;  it  will  follow  that  the  rate  of  wages  is  dependent 
on  the  relation  which  the  capital  of  a  country  bears  to 
the  numbers  of  the  people."  ^°  Vethake's  mathematical 
training  well  suited  him  to  an  arithmetical  wage-fund 
theory,  which  he  persistently  maintains  throughout  his 
discussion  of  population.  Assuming  this  as  a  truth  be- 
yond debate,  he  turns  his  attention  to  forces  regulating 
the  size  of  the  dividend  and  of  the  divisor. 

Turning  now  to  forces  which  keep  population  in  abey- 
ance to  the  fund  prepared  for  it,  he  presents  with  clear- 
ness and  force,  but  adds  nothing  new  to,  the  theory  of 
the  positive  and  preventive  checks.  ^^  He  places  depend- 
ence chiefly  upon  the  elevating  of  man's  desires  and 
standards  of  living.  To  this  end,  he  advocates  the  ele- 
vation of  morals,  the  increase  of  foresight  through  edu- 
cational processes,  progress  in  arts,  and  governmental 
interference  regarding  the  well  being  and  marriage  of 
the  poor,  ignorant,  and  unfit.*"'- 

His  discussion  on  population  centers  about  the  word 
"tendency."  He  uses  the  term,  he  says,  in  analogy  to 
the  use  made  of  it  in  mechanical  philosophy  from  which 
it  is  borrowed.  He  said,  "A  body,  placed  in  one  of  the 
scales  of  a  balance,  is  very  properly  said  to  tend  towards 
the  earth."  ^^  He  further  said,  "In  morals  also,  we  con- 
tinually compare  the  influence  of  motives  on  the  mind 
with  the  action  of  mechanical  causes  on  matter."  ^*  His 
reasoning  brings  him  to  the  result,  "that  this  tendency  is 
always  in  exact  proportion  to  the  lorce  of  the  check 
which  is  presented  by  the  difficulty  of  procuring  the 
means  of  support;  and  consequently,  that  it  is  greatest, 

00  lb.,  100. 
«/&.,  101. 

«2-/6.,  110-115,  Chap.  VII. 
M76.,  108.      <^*Ib. 


70  THE    RICARDIAN    RENT    THEORY 

not  when  population  increases  most  rapidly,  but,  on  the 
contrary,  when  this  increase  is  the  slowest."  ^' 

It  is  difficult  to  determine  just  what  Malthus  had  in 
mind  when  he  used  the  term  "the  principle  of  popula- 
tion." Vethake  makes  his  use  clear,  if  it  can  be  said 
that  his  definition  of  "tendency"  is  clear.  "This  tend- 
ency," said  he,  "I  shall  hereafter  designate  as  the  princi- 
ple of  population."  ^® 

According  to  his  use,  the  word  "tendency"  indicates 
nothing  as  to  actual  movement.  If  this  tendency,  as  he 
claims,  is  in  exact  proportion  to  opposing  force,  and 
greatest  when  the  increase  of  numbers  is  slowest,  it 
follows  that,  if  counteracting  forces  were  nil,  tendency, 
which  is  in  exact  proportion,  would  also  be  nil.  Sec- 
ondly, if  tendency  is  greatest  when  increase  is  slowest, 
it  would  be  less  when  increase  is  more  rapid  and  nil 
when  increase  in  numbers  is  most  rapid.  Our  author, 
to  use  his  own  words,  wished  tendency  to  be  "employed 
in  perfect  analogy  to  the  use  made  of  the  term  tendency 
in  mechanical  philosophy."  ^^  Then,  a  train  running 
at  the  fastest  possible  speed  would  have  no  tendency 
to  do  so,  while  one  standing  would  have  the  greatest 
tendency  to  move,  or  this  same  reasoning  will  apply 
to  his  example  of  the  weight  on  one  of  the  scales  of  a 
balance. 

Without  further  comment  on  the  ambiguity  of  the 
word  "tendency,"  without  considering  the  inappropriate- 
ness  of  the  analogies  between  the  moral  laws  regulating 
population  and  the  physical  laws  operative  in  mechanical 
philosophy,  and  without  showing  that  analogies  from 
biological  science  might  be  more  appropriate,  let  us  turn 
to  his  views  on  rent. 

«/6.,  109. 
"lb.,  108. 


HENRY   VETHAKE  71 

Respecting  the  agents  which  produce  rent,  Professor 
Vethake  seems  not  to  be  Hmited  by  the  orthodox  teach- 
ings. In  fact,  he  saw  glimpses  of,  and  at  times  gave 
expression  to,  the  rent  problem  in  its  broader  aspects. 
But,  after  stumbling  into  the  right,  he  unfortunately 
turned  to  the  wrong.  He  mentions  agents  producing 
rent  to  be :  land,  mines,  fisheries,  manufactures,  stands 
for  business,  '^^  and  monopolies.  ^^  His  discussion  of 
capital, ""  as  well  as  his  definition  and  treatment  of  rent, 
in  reality  classifies  land  as  capital. 

He  does  not  formally  define  rent,  but  the  following 
quotation  is  in  strict  keeping  with  his  discussion  of 
the  subject :  "Political  Economists  have  found  it  expe- 
dient to  separate  from  the  profits  received  in  any  employ- 
ment that  portion  by  which  they  may  exceed  in  amount 
those  yielded  to  the  capital  invested  most  disadvan- 
tageously  in  the  same  employment,  and  have  designated 
such  excess  by  the  name  of  rent.  All  land,  consequently, 
yields  rent,  excepting  the  land  just  taken  into  cultivation ; 
and  so  too  does  every  portion  of  capital  which  is  applied 
to  the  land  before  cultivated,  with  the  exception  only 
of  what  is  the  last  applied."  '^  This  makes  rent  a  por- 
tion of  profits.  It  is  the  excess  over  costs.  This  is 
further  illustrated  when  he  says  that,  if  $500  be  paid 
for  the  use  of  a  farm,  it  is  an  error  to  denominate  the 
whole  payment  as  rent,  since  a  portion  is  payment  for 
the  capital  in  the  land.  ^"  He  speaks  of  a  lease  being 
composed  of  usual  profits  and  of  extra  profits  or  rent. 
Vethake  insists,  elsewhere,  that  rent  is  a  product  of 
labor."^ 

««/&.,  68. 

89  lb.,  70. 

TO  76.,  Book  I,  Chaps.  IV,  V. 

Ti/6.,  70. 

"/&.,  71-72. 

»/6.,  74. 


'J2  THE    RICARDIAN    RENT    THEORY 

So  far,  he  has  made  rent  a  payment  by  one  person 
to  another,  as  Ricardo  did  when  he  was  contending 
that  rent  does  not  add  to  the  wealth  of  a  nation.  Also 
he  accompanies  Ricardo  in  making  two  uses  of  the  term 
rent  when  he  claims  that,  if  the  farmer  till  his  own  soil, 
the  excess  is  rent.  "*  This  confusion  of  the  strictly 
economic  concept  of  yield  with  the  contractual  or  legal 
concept  of  rent,  pervades  economic  literature  and  de- 
feats clear  reasoning  on  that  most  fundamental  problem, 
proportionality. 

Like  Ricardo,  he  finds  that  cost  of  production  under 
the  most  unfavorable  circumstances  determines  price.  ^^ 
This  enables  him  to  agree  with  Ricardo  that  rent  does 
not  enter  into  price.  "® 

On  diminishing  returns,  he  takes,  as  does  Ricardo,  a 
static  view  regarding  the  instrumentalities  of  production 
and  a  dynamic  view  of  the  growth  of  population.  Both 
apply  the  law  intensively  as  well  as  extensively.  ^'' 
Vethake  would  make  the  law  applicable  to  all  rent-bear- 
ing agents ;  "^  but,  in  conflict  with  some  of  his  state- 
ments, he  expresses  belief  in  constant  returns  to  manu- 
factures. 

A  treatise  on  this  group  of  economists  would  be  incom- 
plete without  mention  of  the  work  of  Marcius  Wilson. 
This  author  wrote  a  volume  on  Civil  Polity  and  Political 
Economy  (1838),  in  which  he  followed  very  closely  the 
work  of  President  Wayland.  His  was  a  brief  high  school 
text,  in  which  he  attempted  two  fields  of  such  propor- 
tions as  to  make  impossible  the  development  of  a  theory 
of  rent. 

He  teaches  that  land  is  capital.     He  classifies  tilled 

''^  Cf.   Ricardo,   Principles,   48;   Vethake,  Principles,   71. 

'^Vethalje,  Principles,  69-70. 

'8/b.,   70.       'T/fe.,  69.       ■'8i&.,  68-69. 


HENRY    VETHAKE  73 

land  as  productive  capital  and  as  fixed  capital.  ^^  "Rent, 
or  the  price  paid  for  the  use  of  land,  is  regulated  by 
the  same  principles  that  regulate  the  interest  upon  other 
kinds  of  capital."  ^°  The  principle  regulating  interest 
is,  he  teaches,  the  law  of  supply  and  demand.  He  would 
make  due  allowance  for  risk.  ^^ 

On  the  whole,  his  ideas  were  in  harmony  with  those 
of  the  more  optimistic  American  economists  respecting 
the  population  problem. 

The  economists  reviewed  in  this  chapter  w-ere  some- 
what confused  in  their  reasoning  upon  the  rent  problem. 
Their  writings  followed  closely  the  form  of  expression 
used  by  Ricardo,  and  they  copied  his  differential  method 
of  explaining  land  rent.  But  the  comparison  between 
their  thought  and  that  of  Ricardo  ends  with  the  outward 
form  of  presentation.  They  mistook  the  form  of  his 
writing  for  its  content,  and  gave  little  more  than  a  veneer 
of  the  Ricardian  theory  of  rent.  They  took  the  law  of 
supply  and  demand,  not  without  many  exceptions,  as 
the  regulator  of  value ;  and  consistently  with  this  posi- 
tion, they  reasoned  that  labor  cost  could  affect  value 
only  by  affecting  supply.  They  defined  Malthusianism 
and  gave  it  favorable  comment;  but,  in  the  course  of 
their  reasoning,  they  turned  deliberately  from  that  doc- 
trine, and  favored  a  larger  population  to  supply  the 
industrial  need  of  America;  they  not  infrequently  re- 
garded land  as  capital,  and  spoke  of  rent  as  synonymous 
with  interest;  they  regarded  the  margin  as  price-deter- 
mined rather  than  price-determining,  and,  in  conse- 
quence, they  regarded  rent  as  a  part  of  the  cost  of  pro- 
ducing goods. 

TO  Wilson,    Civil  Polity   and    Political  Economy,    130,    131. 
80/&.,  181. 
81/6.,  177-186. 


74  THE    RICARDIAN    RENT    THEORY 

The  confusion  in  thought  of  the  writers  who  have 
been  reviewed,  bears  evidence  of  two  unlike  influences 
— the  knowledge  that  they  acquired  from  books  was 
gleaned  from  the  English  texts,  whereas  the  practical 
problems  that  they  faced  in  the  new  world  were  such 
that  the  English  writings  provided  no  solution.  The 
following  chapter  will  be  devoted  to  the  writings  of 
J.  N.  Cardozo,  a  capable  opponent  of  Ricardo,  whose 
ideas  were  of  such  merit  as  to  make  his  treatment  worthy 
of  a  separate  chapter. 


CHAPTER   IV 
JACOB    NEWTON    CARDOZO 

JACOB  NEWTON  CARDOZO/  like  Ricardo, 
was  a  descendant  of  the  Portuguese  Jews.  He 
had  only  a  common  school  education,  which  he 
received  in  the  public  schools  of  Charleston,  South 
Carolina. 

The  Southern  Patriot,  under  his  direction,  became  a 
recognized  free  trade  organ.  In  a  political  capacity, 
Cardozo  was  thrown  into  contact  with  Robert  Y.  Hayne, 
John  C.  Calhoun,  and  George  McDuffe.  His  memorial 
against  the  tariff  of  1828  was  unanimously  adopted  by 
the  Charleston  Chamber  of  Commerce.  Frequent  refer- 
ences, in  his  Notes  on  Political  Economy,  to  Adam 
Smith,  Say,  Sismondi,  Malthus,  and  Ricardo,  indicate 
a  familiarity  with  the  ablest  works  on  political  economy. 

1  (a)  Lamb's  Biog.  Diet,  of  the  TJ.  S.  gives  accurately  the  early  career 
of  Cardozo.  It  erroneously  gives  the  name  Isaac  N.,  and  says  that  he 
was  drowned  in  the  James  river,  Aug.  26,  1856.     I,  566. 

(b)  The  Twentieth  Cent.  Biog.  Diet,  of  Noted  Americans  gives  the 
same    description.      II    (no  paging). 

(c)  Appleton's  Encyc.  of  Amer.  Biog.  errs  in  this  respect.      I,  523. 

(d)  North  Amer.  Rev.,  XXIV,  169-187,  gives  a  contemporary  review 
of  the  book  Cardozo  wrote  on  political  economy.  The  initials  published 
here  are  J.  N. 

(e)  Palgrave's  Diet.,  I,  225,  gives  a  description  of  the  author  under 
the   name   Isaac  N.   Cardozo.      This  was  written   by  D.   R.   Dewey. 

Biographical  references  to  Cardozo  are  conflicting.  The  same  char- 
acter has  frequently  been  described  under  the  name  Isaac  N.  Cardozo. 
The  initials  J.  N.  instead  of  I.  N.  appear  in  his  book  and  in  the  "South- 
ern Patriot"  while  he  was  its  editor.  I  take  the  following  from  a  card 
which  is  found  in  the  card  catalogue  of  the  Library  of  Congress:  "Not 
Isaac  Newton,  as  very  generally  entered  in  American  biographical  works 
of  reference :  the  man  there  described  as  editor  of  the  Southern  Patriot 
and  leader  of  the  Charleston  (S.  C)  Evening  News,  and  said  to  have 
been  drowned  in  1850,  is  Jacob  N.  who  was  alive  in  1866,  and  pub- 
lished his  reminiscences.  One  Isaac  Cardozo  was  a  clerk  in  the  Southern 
Patriot  office  at  the  time  J.  N.  was  editor." 

Cardozo's  little  book,  "Reminiscenees  of  Charleston,  by  J.  N.  Cardozo, 
Charleston,   1866,"  makes   it   clear  that  the  reminiscences  were  written  in 


76  THE    RICARDIAN    RENT    THEORY 

Cardozo  was  an  ingenious  writer  who  had  the  courage 
of  his  convictions.  His  training  in  economics,  his  editor- 
ship of  a  leading  paper,  his  relationships  with  men  fam- 
ous in  politics,  his  victorious  opposition  in  South  Caro- 
lina to  the  tariff  of  1828  when  Calhoun  made  his  turn 
against  national  powers,  were  forces  which  led  him  to 
great  prestige  in  the  South.  But,  with  the  passing  of 
the  issue  which  gave  him  power,  Cardozo  was  forgotten, 
and  the  influence  of  his  work  was  but  transient. 

Considering  the  close  relationship  between  the  free- 
dom of  trade  and  the  Ricardian  theory  of  rent,  we  should 
expect  a  staunch  free  trader  of  that  time  to  be  in  har- 
mony with  the  orthodox  teaching  on  rent.  But,  in  this 
particular,  Cardozo  differs  from  all  the  other  economists 
we  have  to  review.  That  Ricardian  rent  and  the  free- 
dom of  trade  tended  to  go  hand  in  hand  was  evidenced 
in  the  sixties  when  a  tendency  was  started  from  na- 
tional economy  to  the  freedom  of  international  com- 
merce. It  seems  at  this  time  that  there  was  a  reversion 
on  the  part  of  American  economists  back  to  the  Ricar- 
dian theory  of  rent  as  a  basis  for  their  argument.  In 
the  case  of  McDuffe,  one  finds  a  striking  example,  for, 
as  is  well  known,  his  arguments  for  the  freedom  of  trade 
were  often  based  on  the  Ricardian  theory  of  rent.     But 

1866  and  that  their  author  was  the  editor  of  the  Southern  Patriot  and 
founder  of  the  Evening  News.  A  few  quotations  from  the  Reminiscences 
will  bear  out  the  point:  "An  absence  of  five  years  from  Charleston,  a  city 
in  wliich  I  had  resided  sixtv-five  years,  .  .  .  "  is  taken  from  his 
preface,  which  is  dated  June  17,  1866,  at  Charleston.  He  speaks  of  him- 
self as  active  in  the  formation  of  the  Charleston  Chamber  of  Commerce, 
(Cardozo,  Reminiscences,  23),  as  a  framer  of  a  memorial  to  Congress 
against  the  "Bill  of  Abominations"  (Cardozo,  Reminiscences,  24),  in  the 
"year  1827  or  1828."  "Our  connection  with  the  press  dates  back  to  the 
year  1817,  when  the  author  of  these  Reminiscences  became  the  writing 
editor  of  The  Southern  Patriot"  (Cardozo,  Reminiscences,  31).  "The 
Southern  Patriot  was  purchased  by  J.  N.  Cardozo  on  the  first  of  January 
of  this  year,  who  continued  as  sole  proprietor  and  editor  until  April.  1845. 
."  (  Cardozo,  Reminiscences,  34).  "The  author  of  the  Rem- 
iniscences then  founded  The  Eveninij  Neios"  (Cardozo  Reminiscences,  34). 
Now  that  the  founder  of  The  Evening  News  and  editor  of  The  Southern 
Patriot  was  author  of  Notes  on  Political  Economy  has  never  been  ques- 
tioned. 


JACOB    NEWTON    CARDOZO  y'j 

Cardozo  was  as  strong  an  opponent  of  Ricardian  rent 
as  he  was  of  the  tariff. 

He  opposed  Malthusianism.  "The  increase  of  popu- 
lation .  .  .  depends,"  said  he,  "on  the  extent  of 
the  improvements  in  agriculture,  and  inferior  land  is 
laid  down  in  tillage  exactly  in  proportion  as  these  im- 
provements extend.  This  is  the  reverse  of  the  new 
theory  which  connects  the  augmentation  of  population 
and  produce  with  the  increased  difficulty  instead  of  the 
increased  facility  of  production.  This  is  only  an  exten- 
sion, however,  of  the  principle  with  whose  wonderful 
results  in  manufactures  we  are  familiar."  ^ 

Cardozo  would  readily  admit  that,  under  static  condi- 
tions respecting  ways  and  means  of  production,  an  in- 
crease of  population  would  result  in  a  diminution  of 
returns  per  capita.  To  him,  however,  this  is  not  worthy 
of  consideration.  He  implied  a  standard  of  living  be- 
yond which  population  will  not  increase ;  he  thought  that 
the  growth  of  science  and  invention  compose  a  stronger 
positive  force  than  is  the  negative  force  of  resistance. 
Thus,  through  time,  there  is  an  ever-growing  increase 
of  production;  and  the  increase  of  population  is  just 
rapid  enough,  by  maintaining  the  same  standards  of  com- 
fort, to  consume  this  augmentation  of  products.  ^  From 
this,  it  must  follow  that  there  would  be  no  variation  in 
the  relation  between  the  supply  and  the  demand.  With 
this  in  mind,  let  us  briefly  review  his  reasoning  on  rent. 

His  approach  to  this  subject  is  through  a  criticism 
of  Ricardian  rent.  Ricardo  teaches  that  rent  begins 
when  tract  number  2  comes  under  cultivation,  and  that 
it  increases  as  3,  4,  5  and  on  down  are  brought  under 
cultivation.  *     Contrary   to   this,    Cardozo   reasons   that 

2  Cardozo,  Notes,  35. 

»/6.,  35,  36. 

■*  Ricardo,  Principles,  47,  48. 


78  THE    RICARDIAN    RENT    THEORY 

rent  begins  "from  the  moment  land  is  taken  into  cultiva- 
tion." ^ 

Ricardo  teaches  that  the  origin  of  rent  is  to  be  found 
in  the  different  qualities  of  land  or  uses  of  land,  with 
respect  to  its  productive  powers.  ^  Contrary  to  this, 
Cardozo  reasons  that  "relative  fertility  can  only  account 
for  the  inequalities  of  rent;  it  can  neither  explain  its 
origin  nor  its  increase.  If  rent  be  that  portion  of  the 
product  which  is  paid  for  the  use  of  the  original  and 
indestructible  powers  of  the  soil,  its  amount  must  be  in 
proportion  to  those  powers,  and  can  be  increased  only 
as  they  increase,  or  diminish  as  they  diminish  .  .  ."  ^ 
He  teaches  that  increased  productivity  means  that  ac- 
quired fertility  is  added  to  the  land.  "The  original  and 
indestructible  powers  of  the  soil,  as  they  do  not  admit  of 
diminution,  cannot  admit  of  increase.  Land  of  different 
degrees  of  fertility  will  yield  different  rents.  Relative 
fertility  will  therefore  account  for  relative  rent,  and 
nothing  more."  ^ 

In  reply  to  Ricardo's  no-rent  land  concept,  Cardozo 
said,  "This  is,  however,  assuming  what  does  not  exist."  ^ 

Ricardo  teaches  that,  as  inferior  land  is  brought  under 
cultivation,  the  landlord  is  doubly  blessed  because  he 
obtains  a  greater  share  and  because  the  commodity  in 
which  he  is  paid  is  of  greater  value.  ^*^  Contrary  to 
this,  Cardozo  reasons  that  the  "new  school"  (meaning 
the  Maltho-Ricardian)  make  "the  rise  of  raw  produce 
to  follow  from  the  difficulty  of  production,  and  yet  they 
state  that  the  demand  for  additional  produce  precedes, 
as  it  must,  the  cultivation  of  inferior  land,  which  is,  in 

s  Cardozo,   Notes,  33-34. 

8  Ricardo,   Principles,  46. 

■^  Cardozo,  Notes,  21. 

«  lb. 

«  lb.,   31. 

1"  Gf .  Ricardo,  Principles,  60 ;    Cardozo,  Notes,  24. 


JACOB    NEWTON    CARDOZO  79 

fact,  saying  that  the  increase  in  price  is  both  cause  and 
effect."  '' 

He  thinks  that  the  law  of  supply  and  demand  makes 
it  inconceivable  that  the  landlord  should  be  doubly 
blessed;  for,  as  the  supply  increases,  prices  would  be 
lowered.  He  thinks  that  money  rent  and  corn  rent  must 
vary  in  inverse  ratio.  ^-  Cardozo  was  in  error  in  laying 
this  down  as  an  unvarying  rule.  He  overlooked,  in  his 
argument,  both  the  increase  and  the  elasticity  of  demand. 
According  to  the  theory  of  differential  land  rents,  money 
rent  and  corn  rent  may  go  up  at  the  same  time.  Ricardo 
was  right  in  maintaining  this,  but  his  error  was,  as  I 
have  shown,  ^^  in  the  claim  that  rent  does  not  add  to  the 
wealth  of  a  nation  when  the  word  "rent"  is  used  in 
the  sense  of  a  physical  return. 

It  is  difficult  to  determine  just  what  Cardozo's  rent- 
concept  is.  Under  restricted  competition  where  land  is 
purchased  for  hire,  he  said : 

Its  rent  must  continue  invariable  in  amount,  and  must  be 
governed  by  the  same  law  which  regulates  the  interest  on  a 
loan  of  capital  to  be  employed  productively  by  the  borrower. 
The  amount  of  rent  can  never  vary — can  never  increase  nor 
diminish,  because  the  natural  fertility  of  the  land,  its  "original 
and  indestructible  powers,"  are  always  supposed  to  be  the  same. 
It  is  the  use  of  these  powers  for  which  rent  is  paid,  and  what- 
ever value  the  proprietor  sets  on  them  or  w^hat  they  have  cost 
him,  must  determine,  on  the  principal  of  an  ordinary  loan,  the 
amount  of  value  annully  to  be  paid  for  their  use,'  in  other 
words,  the  amount  of  rent.  The  price  of  food  raised  on  such 
land,  the  price  of  land  itself  and  its  rent  will  be  at  fair  com- 
petitive rates  which  we  may  call  the  natural  price  and  rent  of 
land.i* 

This  rent,  he  claims,  enters  into  price  precisely  as  do 
profits  and  wages.^^     He  gives  no  formal  definition  of 

"Cardozo,  Notes,  24-25. 
12/&.,  23-24. 
''^  Supra,  ch.  I. 
"  Cardozo,   Notes,   27. 
«!&.,  38. 


8o  THE    RICARDIAN    RENT    THEORY 

rent,  but  his  concept  might  be  worded  as  follows :  Rent 
is  the  competitive  price  paid  for  the  use  of  the  unvary- 
ing natural  fertility  of  the  land. 

His  reasoning  implies  that  population  increases  in  an 
unvarying  proportion  to  what  he  terms  "acquired  fertil- 
ity." He  assumes  both  a  common  standard  of  living  and 
the  inelasticity  of  individual  demands.  As  we  have  seen, 
he  allowed  for  no  variation  in  the  relation  between  sup- 
ply and  demand.  ^®  Demand  grows  to  the  extent  that 
production  is  augmented.  It  must  follow  that  individual 
demands  and  the  supply  per  individual  are  constant. 

In  the  light  of  this,  can  it  be  said  that  the  price  paid 
for  the  original  and  indestructible  powers  of  the  soil  is 
unvarying?  Yes,  if  we  capitalize  this  natural  fertility 
and  regard  rent  as  a  per  cent.  No,  if  we  regard  rent 
as  an  amount  paid  for  the  uses  of  these  original  qual- 
ities; for  their  amount  increases  with  every  force  that 
converts  potential  use  into  effective  use.  Subconsciously, 
Cardozo  regarded  rent,  I  think,  in  the  sense  of  a  per 
cent.  Now  that  he  seemed  to  confine  rent  to  natural 
fertility,  what  would  he  term  the  price  paid  for  the  use 
of  acquired  fertility?  Contextually,  he  regards  it  as 
profits  on  capital ;  for  acquired  fertility  is,  in  places,  it 
seems,  assimilated  to  the  productivity  of  machinery  and 
scientific  application.  But,  if  the  payments  for  both 
natural  and  acquired  fertility  are  assimilated  to  profits, 
and  are  regarded,  as  they  seem  to  be,  as  a  per  cent,  why 
differentiate  between  them  by  calling  the  one  payment 
rent  and  the  other  profits? 

Cardozo's  constructive  argument  is  so  involved  in 
uncertainty  as  to  make  it  difficult  to  determine  what 
it  was  he  meant.  He  does  admit  that  rents  are  variable, 
and  that  they  are  often  above  "natural"  rents;  but,  in 

"/&.,   109. 


JACOB    NEWTON    CARDOZO  8l 

language  very  similar  to  that  which  Raymond  used,  he 
declares  that  such  rents  are  due  to  the  unequal  distribu- 
tion of  lands,  to  the  want  of  good  titles,  to  enclosures 
by  the  aristocracy,  and,  in  short,  to  all  barriers  which 
destroy  free  competition.  ^^  This  extra-natural  rent,  or 
that  beyond  a  competitive  rate,  he  termed  monopoly 
rent,  ^^  and  said  that  it  exactly  measures  the  degree  of 
monopoly. 

On  diminishing  returns,  his  argument  was  practically 
the  same  as  that  of  Senior  ^^  and  Chalmers,  ^°  which 
appeared  a  short  time  afterwards.  He  holds  to  the  con- 
cept of  static  diminishing  returns  from  land  and  of 
historical  increasing  returns  from  manufacture.  "The 
results  of  skill  and  science  in  manufactures  are,"  he 
said,  "visible  to  all — they  are  embodied  in  machinery. 
But  in  agriculture,  they  become  a  part  of  the  soil,  or 
are  blended  with  it  and  cannot  be  distinguished  from  it. 
We  are  therefore  urging  no  novel  principle  in  insisting 
that  in  agriculture  the  inventive  powers  of  producers 
will  be  as  efficacious  from  the  same  causes  as  in  manu- 
factures. That  they  will  be  equally  efficacious  is  neces- 
sary to  the  level  of  profits  or  to  an  equality  of  benefit 
between  agriculture  and  other  employments."  ^^ 

In  this  chapter,  we  have  found  Cardozo,  the  success- 
ful editor  and  careful  student  of  public  affairs,  to  be 
opposed  to  Ricardian  rent  and  Malthus'  theory  of  popu- 
lation. He  reasoned  that  volitional  control  is  such  that 
numbers  will  not  increase  beyond  the  established  stand- 
ard of  living.  .  He  taught  that  the  growth  of  productive 
power  would  continue  in  advance  of  the  growth  of  pop- 

"  Cardozo,  Notes,  26-27. 

18  7b.,  28. 

1*  Senior,   Tu'o   Lectures  on  Population,   35,   36. 

^Chalmers,  Political  Econoviy,  172-173. 

21  Cardozo,  Notes,  36. 


82  THE    RICARDIAN    RENT    THEORY 

ulation,  and  that,  since  population  follows  in  the  lead  of 
production,  there  could  never  be  the  misery  from  over- 
numbers  which  the  theory  of  Malthus  contemplated.  He 
denied  Ricardo's  no-rent  concept,  and  taught  that  dif- 
ferences in  the  productive  power  of  the  soil  may  serve 
as  a  measure  of  rent  but  never  as  a  cause.  He  says 
that  the  margin  is  price-determined,  that  rent  enters 
into  the  cost  of  production.  In  agreement  with  Malthus, 
he  argued  that  rent  as  a  product  of  industry  must  be 
an  addition  to  national  wealth.  He  recognized  that  di- 
minishing returns  is  applicable  to  land  under  static  con- 
ditions, but  he  reasoned  that  improvements  through  in- 
ventions and  new  methods  of  cultivation  when  used  in 
agriculture,  become  a  part  of  the  soil.  Because  improve- 
ments are  blended  with  the  soil,  the  inventive  powers 
of  producers  will  be  as  efficacious  in  agriculture  as  in 
the  field  of  manufactures.  The  next  chapter  will  be 
devoted  to  George  Tucker,  who  also  opposed  Ricardian 
rent ;  but  who,  we  shall  find,  founded  his  argument  upon 
a  new  and  more  advanced  basis  than  we  have  thus  far 
discovered  in  this  study. 


CHAPTER  V 
GEORGE  TUCKER 

GEORGE  TUCKER  (1775-1861)  of  Virginia 
should  be  ranked  among  the  strongest  Ameri- 
can economists  prior  to  the  Civil  War.  Econ- 
omists have  not  forgotten  him;  they  never  knew  him. 
A  few  specialists  in  statistics  remember  his  work  in  that 
field,  but  the  students  of  economic  thought  make  no 
mention  of  his  theoretical  writings.  He  was  too  far 
in  advance  of  contemporary  thought  to  be  appreciated; 
and  his  works  were  out  of  print  long  before  they  could 
have  been  justly  appraised.  I  shall  present  the  chief 
facts  on  his  life  and  writings,  study  some  of  his  funda- 
mental principles,  and  present  in  detail  his  reasoning  on 
the  problem  which  interested  him  most — the  rent 
problem. 

He  was  born  in  Bermuda  and  died  in  Virginia.  He 
was  inspired  by  his  uncle.  Judge  St.  George  Tucker, 
to  attend  William  and  Mary  College,  where  he  was  grad- 
uated at  the  age  of  tvvcnty-two.  Tucker  was  admitted 
to  the  bar,  and  practiced  at  Lynchburg  until  he  entered 
Congress  in  1819,  where  he  served  for  six  years.  He 
then  accepted  a  professorship  of  moral  philosophy  and 
political  economy  in  the  University  of  Virginia  where 
he  remained  from  1825  to  1845.  ^  ^^'s  early  writings 
cover  a  wide  range  of  subjects.  ^ 

1  Palgrave,  Diet.,  Ill,   568;   Nat.  Encyc.  of  Amer.   Biog.,  VII,   521. 

2  He  wrote  on  slavery,  on  subjects  of  taste,  and  a  novel  on  the  Val- 
ley of  Shenandoah,  The  Life  of  Thomas  Jefferson,  a  four  volume  history 
of  the  United  States,  Essays  Moral  and  Philosophical.  His  principaJ 
works  on  economics  are :  Law  of  Wages,  Profits  and  Rent  Investigated, 
(Phila.,     1837)  ;     Theoi-y    of    Money    and    Banks    Investigated,     (Boston, 


84  THE    RICARDIAN    RENT    THEORY 

Tucker  was  a  scholarly  man  who  labored  for  the 
cause  of  science  and  a  statesman  whose  power  as  a 
debater  in  Congress  was  widely  recognized.  His  search- 
ing work  on  statistics  and  his  American  History  of  four 
volumes  demonstrate  strong  ability  in  analysis  and 
method.  His  pleasing  style  was  supported  by  a  careful 
organization  of  facts.  The  motive  of  his  activity  was 
that  public  opinion  might  give  to  right  thinking  the 
form  of  law. 

While  in  Congress,  Tucker  was  in  harmony  with  Pres- 
ident Madison's  wish  for  centralization  in  Congressional 
legislation.  He  was  an  influential  member  of  the  com- 
mittee to  consider  and  to  favor  that  cardinal  act  of  the 
administration,  the  United  States  Bank  Act  of  1816. 
The  purpose  of  his  chief  theoretical  work,  Wages, 
Profits,  and  Rent  ( 1837)  was  to  show  the  general  inap- 
plicability of  Ricardian  economics  and  to  treat  construc- 
tively the  problems  of  wages,  profits,  and  rent. 

What  was  his  estimate  of  Ricardo?  Almost  a  century 
ago,  his  estimate  of  David  Ricardo  was  the  same  as  that 
held  by  many  leading  thinkers  of  to-day.  "He  [Tucker 
speaking  of  himself]  has  long  been  of  opinion  that  Mr. 
Ricardo,  though  possessing  merit  of  a  very  high  order 
as  a  writer  on  political  economy,  and  entitled  to  all  his 
reputation  for  a  thorough  knowledge  of  the  subjects  of 
money  and  finance,  is  mistaken  in  his  elementary  prin- 
ciples of  the  science;  that  the  origin  and  progress  of 
rents  admits  of  a  more  simple  and  natural  explanation 
than  he  has  given ;  that  his  theory  of  wages  is  incon- 
sistent with  itself,  and  that  of  profits  contradicted  by 
the  whole  history  of  capital  in  the  civilized  world."  ^ 

1839)  ;  Progress  of  the  United  States  in  Population  and  Wealth  in  Fifty 
Tears,  (N.  Y.,  1843)  ;  Correspondence  with  Alexander  H.  Everett  on 
Political  Economy,  (1845)  ;  Banks  or  no  Banks,  (N.  T.,  1857)  ;  Political 
Eccnomy   for   the   People,    (Phila.,    1859). 

*  Tucker,   Wages,  Profits,  and  Rent,  Pref .,  iv. 


GEORGE   TUCKER  85 

The  theory  of  value  was  his  starting  point  in  his  at- 
tack upon  Ricardo.  Some  portions  of  his  writings  on 
this  subject  read  Hke  pages  from  the  recent  psychologi- 
cal economists.  "Value,"  he  said,  "in  its  largest  sense, 
means  the  feeling  with  which  we  regard  whatever  can 
render  us  benefit  or  afford  us  gratification.  In  this 
sense,  it  is  an  emotion  of  our  minds  comprehending  all 
that  can  impart  pleasure  to  our  senses,  our  tastes,  or 
desires;  as  health,  talents,  friendship,  reputation,  land, 
money,  and  goods.  It  varies  according  to  the  endless 
diversities  of  objects,  and  of  human  tastes  or  opinions, 
and  it  is  susceptible  to  all  degrees  of  intensity,  from  a 
simple  wish  to  the  most  passionate  desire."  * 

Epitomizing  his  introductory  chapter,  we  find  that 
self-love  seeking  gratification  is  the  motive  for  ex- 
changes. °  Differences  in  individual  estimates  cause  us 
to  give  objects  for  those  whose  "real  or  imaginary  prop- 
erties" are  preferable.  The  fact  of  exchange  does  not 
indicate  the  value  that  either  party  sets  on  either  com- 
modity, "since  each  might  have  been  willing  to  give 
more  for  that  he  received,  or  take  less  for  that  he  trans- 
ferred." The  case  is  different  in  market  price,  where 
the  mutual  efforts  of  competitors  settle  down  on  uniform 
terms.  His  thought  is  that  individuals,  in  buying  and 
selling,  through  bargaining  come  to  readjust  their  val- 
uations until  their  estimates  are  made  to  conform  to  a 
common  standard,  the  market  price. 

Then,  in  a  market,  each  commodity  is  evaluated  in 
terms  of  some  other,  "that  is  to  say,  neither  commodity 
can  be  estimated  without  estimating  both."  He  says 
in  substance  that  the  products  of  human  labor,  accord- 
ing to  the  principle  of  self-interest,  frequently  will  ex- 
change in  proportion  to  the  amount  of  labor  expended 

*/&.,  1-2.       6  See  pages  1-13. 


86  THE    RICARDIAN    RENT    THEORY 

on  their  production.  "This  has  been  called  the  natural 
price  of  this  class  of  commodities."  But  the  market 
price  varies  from  the  natural  price  according  to  the  law 
of  supply  and  demand.  At  this  point,  his  ideas  of  the 
variation  of  the  subjective  forces  on  the  demand  side 
are  indeed  modern,  and  are  indicative  of  his  philosophi- 
cal training. 

As  for  that  class  of  commodities  produced  wholly  or 
partly  by  nature,  he  finds  their  value  to  be  determined 
"by  the  pleasure  they  confer"  and  the  "insufficiency  of 
their  supply."  "Of  the  same  character  are  the  finer 
products  of  art,  as  the  pictures  and  statues  of  celebrated 
masters,  secrets  in  manufactures,  and  patented  inven- 
tions."    These  are  sometimes  called  monopoly  values. 

Value  furthermore  varies  with  distance  from  the  mar- 
ket. The  cost  of  transportation  must  be  deducted  from 
market  prices.  This  explains  why  gold  and  silver,  so 
well  suited  for  transportation,  are  more  uniform  in 
value  throughout  the  world  than  are  more  bulky  or  per- 
ishable goods.  Different  place-values  "give  rise  to  an 
active  internal  commerce."  Good  roads  and  canals  that 
lessen  expenses  of  transportation  conduce  to  a  greater 
uniformity  of  place-values  as  well  as  to  public  pros- 
perity and  happiness. 

As  measures  of  value,  he  treats  of  the  variability  of 
labor,  corn,  and  the  precious  metals.  He  adds  signifi- 
cantly, "Value  being  an  emotion  of  the  mind,  and  not 
always  exhibiting  the  same  outward  signs,  in  proportion 
to  its  strength,  is  incapable  of  exact  measurement." 
Approximations  are  necessary,  and,  with  proper  caution 
and  diligence,  are  attainable. 

He  thus  adhered  to  the  individualistic  or  subjective 
concept  of  value.  Consistent  with  the  concept  of  sub- 
jective value,  he  thought  that  it  is  not  necessary  for  a 


GEORGE  TUCKER  87 

commodity  to  have  real  utility  in  order  that  we  attach 
value  to  it;  it  suffices  if  it  has  imaginary  properties  capa- 
ble of  rendering  gratification.  The  value  we  attach  to 
a  commodity  depends  upon  its  utility  (real  or  imaginary) 
and  upon  the  strength  of  our  desires  for  the  anticipated 
gratification. 

His  value-concept  may  be  summarized  to  read :  value 
is  subjective,  being  the  importance  which  the  mind  at- 
tributes to  an  objective  good  or  service.  It  varies  with 
the  intensity  of  desire.  Goods  need  not  necessarily  have 
utility  to  be  valued;  it  is  enough  if  we  think  they  have 
utility.  People  think  more  or  less  alike;  therefore,  they 
tend  to  adjust  their  valuations  to  common  standards. 
Exchanges  on  the  market  are  due  to  differences  in  indi- 
vidual valuations.  Although  he  denies  the  cost  of  pro- 
duction as  a  cause  of  value,  yet  he  would  say  that  com- 
petition so  works  as  to  cause  reproducible  commodities 
to  exchange  in  proportion  to  their  cost. 

Consistent  with  his  subjective  theory  of  value.  Tucker 
reasons  that  the  primary  force  in  regulating  population 
is  volitional  control.  He  undertakes  to  demonstrate  the 
effects  of  volitional  control  by  statistics. 

In  treating  the  principle  of  population.  Tucker  will 
be  found  more  conservative  than  his  contemporary 
countrymen,  whose  dream  of  a  vast  population  and  of 
an  intensified  division  of  labor  over  a  diversified  field 
of  industry  would  cause  a  vast  augmentation  of  wealth. 
This  view  caused,  on  the  part  of  many  Americans,  the 
most  extreme  dissent  from  Malthusianism  and  a  very 
exaggerated  desire  for  a  rapid  growth  of  population. 

H.  C.  Carey  follows  in  the  lead  of  Herbert  Spencer 
in  maintaining  that  the  forces  destructive  of  population 
and  preservative  of  it  are  such  as  to  bring  about  and 
to  maintain  an  equilibrium  between  the  numbers  of  peo- 


88  THE    RICARDIAN    RENT    THEORY 

pie  and  the  means  of  their  support.  This  was  a  biologi- 
cal theory.  Tucker's  statistical  study  of  population  led 
him  to  a  similar  conclusion.  "We  see  by  the  preceding 
tables  that  the  natural  increase  of  the  population  is  in- 
versely as  its  density."  ®  Taking  the  examples  of  Massa- 
chusetts, New  York,  Virginia,  Tennessee,  and  Ohio,  he 
endeavored  to  demonstrate  in  each  case  that  the  rule 
of  natural  increase  acts  uniformly,  that  is,  we  perceive 
the  falling  off  in  the  rate,  not  only  in  forty  years,  but 
in  ten  year  periods.  "What  is  true  of  these  states,  will 
be  found  true  in  the  others ;  and  there  are  not  more 
than  two  or  three  cases,  out  of  nearly  a  hundred,  in 
which  the  comparison  can  be  made,  that  the  proportion 
of  children,  and  consequently  the  rate  of  increase,  is 
not  less  at  each  census  than  at  the  census  preceding. '' 
From  these  figures  he  predicted  that  the  population  of 
continental  United  States  would  be  80,000,000  ^  in  1900, 
whereas  it  was  74,000,000. 

This  theory  was  not  first  announced  by  Tucker.  The 
English  author,  M.  T.  Salder,  had  conceived  the  idea, 
and  had  published  two  large  volumes  in  its  support  seven 
years  prior  to  Tucker's  publication.  Salder  attempted 
to  prove  by  statistics  that  population  increases  inversely 
as  its  density.  His  work  was  deficient  and  did  not 
survive. 

Tucker  thought  that  Malthus  had  over-rated  the  pro- 
pensity of  man  to  increase,  and  that  he  had  under- 
rated the  checks  to  population.  In  his  opinion,  popular 
education,  good  government,  and  laws  which  cherish 
individual  self-respect,  are  the  best  means  of  lessening 
the  number  of  the  poor.  ® 

He  turns   from  the  teachings  of  Malthus  on  popu- 

•Tuckfir,  Progress  of  the   TJ.   S.   in  Population,   105. 

■^76.,   105-106.        ^  lb.,  106. 

»  Tucker,  Political  Economy,  222. 


GEORGE   TUCKER  89 

lation  to  Ricardo's  theory  of  wages.  As  a  basis  for 
his  discussion,  I  will  briefly  review  Ricardo's  theory  of 
distribution.  Income  is  divided  into  three  shares:  rent, 
profits,  and  wages.  The  surplus  or  rent  goes  to  the 
landlord  and  the  residue  is  divided  between  labor  and 
capital.  Population  tends  to  out-strip  the  means  of  sub- 
sistence; therefore — because  of  an  increasing  surplus  or 
rent — a  share  diminishing  in  proportion  to  the  increase 
of  population  and  capital  is  left  for  division  into  wages 
and  profits.  Wages  will  not  be  diminished;  therefore, 
profits  must  be  lowered. 

Tucker  begins  the  discussion  of  wages  with  the  asser- 
tion that  labor  is  not  a  cause  of  value  but  a  measure  of 
it.  Like  Ricardo,  Tucker  overlooked  the  element  of  time 
which  vitiates  the  labor  theory  either  as  a  cause  or  as 
a  measure  of  value.  This  is  the  more  remarkable  in 
Tucker's  case  because  even  Ricardo  had  made  numerous 
exceptions  to  his  labor-value  concept,  including  a  recog- 
nition of  the  time  element.  Moreover,  Malthus  had 
given  a  valuable  criticism  on  this  point;  and,  only  three 
years  prior  to  Tucker's  publication  of  1837,  John  Rae, 
with  a  master's  hand,  had  set  forth  the  principle  of 
time-value. 

Tucker  argues  that  value  depends  on  scarcity  and 
utility;  therefore,  labor-cost  or  any  other  influence  can 
affect  value  only  by  affecting  supply.  He  emphasizes 
the  importance  of  the  law  of  diminishing  returns  on 
the  limitation  of  supply.  The  modes  of  industry  and 
the  nature  of  consumption  remaining  the  same,  real 
wages  must  decline  with  an  increase  of  population 
beyond  the  point  of  the  best  adjustment  of  the  factors 
of  production.  Because  of  differences  in  the  appor- 
tionment of  productive  factors  "a.  laborer  in  the  United 
States  can  earn  a  bushel  of  grain  in  a  day,  in  England 


90 


THE    RICARDIAN    RENT    THEORY 


or  France  scarcely  a  peck,  and  in  India,  often  a  quart 
of  rice."  '" 

In  this  connection,  he  gives  a  most  illuminating  dis- 
cussion on  the  relation  between  real  wages  and  the 
nature  of  consumption.  "Subsistence,  it  must  be  recol- 
lected, is  not  a  constant  quantity,  as  many  who  have 
reasoned  on  this  subject  seem  to  consider  it,  but  is 
capable  of  great  variation,  whereby  the  same  soil  is 
capable  of  supporting  widely  different  numbers."  ^^  A 
given  soil  of  one  square  mile  that  would  support  80 
persons  who  consume  animal  food  abundantly,  will  sup- 
port 120  persons  w^ho  consume  animal  food  more  spar- 
ingly, 160  persons  who  subsist  chiefly  on  grain,  and  480 
persons  who  subsist  on  potatoes.  In  the  first  case,  one 
person  consumes  the  product  of  8  acres;  in  the  second, 
5  1-3  acres;  in  the  third,  4  acres;  in  the  fourth,  i  1-3 
acres.  ^- 

The  pressure  of  increasing  numbers  on  the  means  of 
subsistence  causes  the  different  classes  to  adjust  their 
consumption ;  and  population  will  be  increased  or 
checked  as  determined  by  this  adjustment.  ^^  Consump- 
tion remaining  the  same,  numbers  will  increase  at  a  rate 
not  greater  than  the  improvements  in  husbandry.  A 
change  to  a  lower  grade  of  consumption  means  a  diminu- 
tion in  real  wages.  This  tends  to  take  place  with  an 
increase  of  numbers  beyond  the  point  of  diminishing 
returns.  This  tendency  may  be  checked  or  counter- 
balanced by  improvements  in  husbandry,  or  by  the  intro- 
duction of  the  turnip,  drill  husbandry,  or  the  potato.  ^* 
Tucker  attacks  Ricardo's  proposition  that  wages  rise 
as  labor  and  capital  are  employed  on  more  inferior  soil, 

1"  Tucker,    Wages,  Profits,  aiid  Bent.   16-21.      Quotation,   21. 
"/b.,  21. 
^Ih.,  22-23. 
^Ih.,  23. 
"/&.,  24. 


GEORGE  TUCKER 


91 


or  that  the  natural  price  of  labor  has  a  tendency  to  rise 
because  of  a  rise  in  the  price  of  corn.  Ricardo  states 
that  wages  must  rise  in  order  to  support  the  same  num- 
bers in  the  same  degree  of  comfort.  ^^  In  justice  to 
Ricardo,  it  should  be  noted  that  he  meant  money-wages 
rather  than  real  wages.  Tucker,  however,  assumes 
Ricardo's  statement  to  refer  to  real  wages ;  and,  upon 
this  assumption,  he  makes  the  following  statement:  "It 
will  not  be  difficult  to  show  that  this  theory  is  at  once 
contradicted  by  the  facts  and  inconsistent  with  itself."  ^^ 

Tucker  teaches  that  a  rise  of  raw  produce  means  a 
fall  in  natural  wages,  because  the  only  intelligible  idea 
of  a  rise  in  exchange  value  is  that  the  same  commodity 
will  purchase  more  labor.  He  holds  to  the  quantity- 
theory  of  money,  and  claims  that  more  money,  or  better 
substitutes  for  it,  relative  to  the  need  for  money,  will 
cause  a  rise  in  prices  and  money-wages,  although  their 
relative  purchasing  power  would  be  unaffected. 

"The  very  process  which  Mr.  Ricardo  assumes  to 
take  place  to  raise  the  price  of  raw  produce  supposes 
a  fall  in  the  price  ^'  of  labor."  ^^  Ricardo  assumes  that 
the  surplus  goes  as  rent ;  that  there  is  a  common  rate 
for  both  wages  and  profits  which  is  determined  on  the 
most  unfavorable  soil ;  and  that  it  is  the  product  brought 
forth  under  these  most  unfavorable  conditions  that  fixes 
the  price  of  raw  produce.  This  means  that,  as  popula- 
tion grows,  rents  will  increase  while  natural  wages  must 
fall.  Tucker  says  that  the  very  fact  of  this  lower  soil 
coming  into  cultivation  must  mean  a  previous  fall  in 
the  price  of  labor  or  capital,  or  both.  "Raw  produce 
does  not  rise  because  inferior  soils  are  cultivated,  but 

«/&.,  32-34. 

"/&.,  34. 

"  He  dops  not  adhpre  in  this  statement  to  the  money-definition  of  price. 
'^Tucker,    Wages,   Profits,  and  Pent,   35. 


92 


THE    RICARDIAN    RENT   THEORY 


they  are  cultivated  because  raw  produce  has  risen;  and 
the  effect  of  their  cukivation  is  to  lessen  or  to  arrest 
the  rise  rather  than  to  produce  it."  ^^  After  illustrating 
the  point,  he  said  that  Ricardo's  theory  is  "the  same 
thing  as  saying  that  the  fall  of  labor  causes  the  rise  of 
labor."  '' 

Tucker  says,  "Mr.  Ricardo  has  perhaps  been  betrayed 
into  a  theory  so  inconsistent  and  unintelligible  by  assum- 
ing the  wages  of  the  laborer  to  be  a  constant  quantity, 
or  rather  the  amount  of  raw  produce  necessary  for  the 
maintenance  of  himself  and  family."  '^  But,  continues 
Tucker,  an  increase  of  population  will  result  in  a  cheaper 
subsistence  whereby  the  same  soil  will  feed  more  people. 
"The  human  stomach  must  be  filled;  but  it  makes  a 
great  difference  whether  it  be  filled  with  beef,  or  bread, 
or  potatoes."  -- 

Despite  the  accuracy  of  Tucker's  observation,  his  reply 
is  incomplete  in  that  he  overlooks  Ricardo's  point  that 
the  price  of  labor  must  be  high  enough  to  enable  the 
laborers,  one  with  another,  to  subsist  and  perpetuate 
their  race,  without  either  increase  or  diminution,  from 
which  it  follows  that  an  increase  of  rent  tends  to  dimin- 
ish profits  rather  than  wages.  -^  An  additional  criticism 
was  therefore  needed  by  Tucker  to  make  his  case; 
namely,  that  profits  would  tend  to  disappear  and  the 
consequent  discouragement  of  capital  would  take  the 
very  foundation  from  under  both  wages  and  rent.  This 
would  occur  should  a  standard  of  living  be  maintained, 
as  Ricardo  claims,  and  should  population  continue  to 
increase.  Diminishing  profits  are  truly  disheartening; 
but  the  resulting  no-profit    stage,    to  which   Ricardo's 

^"76.,  3o-36. 

20/&.,  37. 

^Ib.,   37. 

^Ib.,  38. 

^  Ricardo,  Politicnl  Economy,  Ch.  V. 


GEORGE   TUCKER  93 

premises  and  reasoning  naturally  lead,  would  arrest  the 
resort  to  inferior  soils.  Too  low  a  rate  of  profit  encour- 
ages the  final  consumption  of  capital. 

On  the  question  of  slave  labor,  much  to  the  credit  of 
a  Virginian  of  his  day  or  much  to  the  credit  of  an  Amer- 
ican, North  or  South,  he,  without  prejudice,  weighs  the 
arguments  on  both  sides  and  comes  to  the  conclusion 
that  the  system  of  slavery  "cannot  exist  in  the  most 
advanced  stages  of  society."  Speaking  of  the  South,  he 
said,  "As  soon  as  those  states  are  supplied  with  as  many 
as  can  work  their  lands  to  advantage,  the  emancipation 
of  slaves,  occasioning  but  a  small  loss  to  any,  and  prov- 
ing a  positive  gain  to  some,  it  will  be  impossible  to  pre- 
vent it."  -* 

On  the  concept  of  capital  and  of  profits  resulting 
therefrom.  Tucker  presents  a  suggestive  though  con- 
fused discussion.  He  taught  that  capital  results  from 
saving.  He  conceived  capital  as  a  productive  agent  such 
as  land  and  tools,  but  he  shifted  to  the  idea  of  capital  as 
value  in  the  discussion  of  profits  as  a  rate  per  cent. 

His  definition  reads,  "Capital  is  that  portion  of  use- 
ful products  which  has  been  saved  out  of  the  former 
profits  of  labor  or  land."  This  implies  an  advance  over 
the  Classical  teaching  that  capital  is  a  result  of  labor, 
in  that  it  allows  for  land  rents  to  be  converted  into  cap- 
ital. He  continues,  "It  thus  arises  from  the  excess  of 
production  beyond  consumption,  and  consists  of  ma- 
chines, tools,  provisions,  manufactures  of  all  kinds,  and 
money — of  every  material  product,  in  short,  that  has 
exchangeable  value."  -^  He  goes  on  to  say  that,  "Land 
itself  must  be  regarded  only  as  a  species  of  capital 
and  the  profit  it  yields  in  the  form  of  rent, 
will  have  a  proportionate  effect  on  the  price,  so  that 

^  Tucker,  Wages,  Profits,  and  Rent,  49,  and  his  Political  Economy,  89. 
^  Tucker,  Wages,  Profits,  and  Rent,   51. 


94  THE    RICARDIAN    RENT    THEORY 

as  the  ordinary  profits  of  capital  fall,  the  price  of  land 
will  rise.      .      .      .If  the  profits  of  capital  are  five  per 
cent,  land  will  sell  for  twenty  years'  purchase, 
etc."  26 

At  times,  he  speaks  of  land  and  capital  as  different; 
yet  he  finds  that  all  of  these  agents  obey  the  law  of 
diminishing  returns,  and  that  they  are  governed  by  the 
same  economic  principles. 

He  teaches  that  land  rent  and  profits  obey  the  same 
laws.  In  a  static  view,  there  is  a  monopolistic  -^  limi- 
tation to  the  scarce  uses  of  capital  at  a  given  time  pre- 
cisely as  in  the  case  of  land.  At  this  point,  his  reasoning 
clearly  foreshadows  the  recent  concept  of  quasi-rents. 

The  demand  for  capital  arises  out  of  the  cost  and 
the  length  of  time  required  to  produce  it  as  compared 
with  the  temporary  needs  for  it.  Demand  is  made  for 
capital  because  of  the  numerous  uses  for  it,  because  of 
its  productive  power,  and  because  of  its  limited  supply 
due  to  its  being  created  only  by  encountering  the  natural 
desires  of  men  for  present  enjoyment.  -^  New  develop- 
ments, such  as  the  building  of  a  railroad  -^  or  the  employ- 
ment of  new  lands,  make  demands  for  capital. 

The  supply  of  capital,  he  says,  is  limited  by  the 
scarcity  of  peculiar  skill,  or  where  the  method  of  fabri- 
cation is  a  secret,  or  where  the  law  precludes  competi- 
tion, as  in  the  case  of  exclusive  rights  secured  by  inven- 
tions. The  natural  desire  for  present  consumption,  and 
the  fact  that  only  a  few  can  meet  the  large  costs  re- 
quired to  produce  some  forms  of  capital,  are  likewise 
conditions  that  limit  the  supply  of  capital.  Because 
the  demand  for  capital  is  quick  whereas  the  production 

'»/6.,  71. 

^  "Monopoly"  is  here  used  in  the  sense  of  scarcity. 
^Tucker,    Wages,  Profits,   and  Rent,   51. 
»/&.,  61-63. 


GEORGE   TUCKER  95 

of  it  is  slow,  it  generates  a  surplus  value  precisely  as 
does  land  or  any  limited  agent.  ^" 

Rent  and  profits  are  the  temporary  and  scarce  uses 
of  land  and  capital  that  command  a  price  in  the  mar- 
ket. ^^  He  maintains  that  rent  is  a  monopoly  price  for 
the  scarce  uses  of  land ;  and,  because  of  these  forces 
which  limit  the  supply  of  capital,  he  likewise  finds  that 
profits  are  due  to  monopoly. 

The  differential  theory,  in  his  judgment,  applies  uni- 
formly to  profits  and  land-rents.  His  reasoning  is,  that 
capital  will  first  be  employed  in  the  most  productive 
uses  and  that  additional  capital  will  find  less  remunera- 
tive employment.  ^'  This  is,  of  course,  a  technological 
concept  of  capital,  for  the  value-concept  forbids  such 
different  rates  of  return  to  capital. 

At  this  point,  the  author's  treatment  of  profits  be- 
comes confused  and  inconsistent.  He  says  that  capital 
can  always  be  invested  in  land,  but  that  such  an  invest- 
ment is  only  a  transfer  and  not  a  creation  of  capital; 
therefore  land  is  a  kind  of  balance  wheel  to  steady  the 
rate  of  profits.  ^^  But  he  says  that  a  resort  to  inferior 
soil  tends  to  raise  profits  because  a  new  and  greater 
demand  is  made  for  capital.  ^* 

Turning  now  to  his  criticism  of  Ricardo  on  profits, 
we  find  the  conclusion  that,  after  a  certain  point  is 
reached  in  the  apportionment  of  population  to  natural 

3075.,  54. 

»ii6.,    57. 

^Ih.,   59-61.       33/5__    71. 

'*/6.,  72.  We  may  criticise  Tucker  at  this  point;  for,  if  land  under 
cultivation  be  the  regulator  for  the  level  of  profits,  it  must  be  marginal 
land,  because  all  the  surplus  is  taken  away  in  the  form  of  rent.  Then, 
if  marginal  land  regulates  the  level  of  profits,  how  can  this  level  go  up 
when  the  margin  goes  down  by  reason  of  resort  to  inferior  soil »  This 
reasoning  makes  the  supply  of  capital  on  lower  margins  have  the  unlike 
effects  of  both  lowering  and  raising  profits.  This  contradiction,  however, 
is  not  quite  so  glaring  when  we  consider  that  the  resort  to  inferior 
soils  is  a  dynamic  concept,  and  that  the  differential  concept  is  static, 
referring  to  lands  or  different  land-qualities  under  cultivation  at  the 
same  time. 


96  THE   RICARDIAN    RENT   THEORY 

resources,  a  diminishing  portion  of  raw  produce  will 
go  to  labor.  He  advances  the  view  that  capital  has  the 
advantage  of  labor,  that  wages  will  be  lowered  relative 
to  profits  because  the  laborer  must  live  and  will  abate 
in  his  wages  rather  than  go  without  food.  Ricardo,  on 
tlie  contrary,  had  argued  that  wages  will  rise  with  an 
increase  of  the  price  of  corn  whereas  profits  will  de- 
crease. Tucker  says  that  the  competing  uses  for  capital 
will  tend  to  keep  profits  from  diminishing.  Referring 
to  Ricardo's  theory,  he  says,  "Corn  can  only  be  said  to 
rise  when  it  will  exchange  for  more  labour. 
In  the  same  degree  that  corn  rises  is  labour  depreciated. 
If  the  same  quantity  of  corn  could  purchase  no  more 
labour  than  before,  in  what  sense  could  it  be  said  to 
rise  ?  Corn  must  be  compared  with  something  else,  when 
we  speak  of  its  change  of  value,  and  it  is  only  with 
labour     .      .      .     that  it  can  be  compared."  ^^ 

One  finds  at  least  three  unlike  ideas  in  Tucker's  treat- 
ment of  profits :  the  differential  idea,  the  temporary 
monopoly  idea,  and  the  cost-of-production  idea.  In 
keeping  with  the  literature  of  his  time,  the  word  "profits" 
expressed  no  definite  concept  to  Tucker.  Profits  was  a 
blanket  term  covering  that  portion  of  income  not  in- 
cluded under  wages  or  land-rent.  Following  his  dis- 
cussion of  profits,  he  turns  to  the  problem  of  land-rent. 

Land-rent  to  him  was  a  contractual  payment  made 
by  one  person  to  another  for  the  use  of  land.  It  pre- 
supposes private  property  in  land ;  therefore  rent  could 
not  exist  in  the  early  stages  of  society.  Rent  depends 
on  fertility  and  on  economic  location.  The  value  of 
the  products  of  land  must  exceed  their  cost  of  produc- 
tion in  order  that  land  may  yield  a  rent.  "Fertility  is 
then  an  essential  prerequisite,  and  different  qualities  of 

at' Tucker,  Wages,  Profits,  and  Rent,  68-69. 


GEORGE   TUCKER  97 

soil,  under  similar  circumstances  of  situation,  will  yield 
rent  in  proportion  to  their  respective  degrees  of  produc- 
tiveness." ^^ 

After  thus,  like  Malthus,  emphasizing  fertility  rather 
than  the  niggardliness  of  nature  as  the  cause  of  rent, 
he  proceeds  to  remark,  as  does  Malthus,  on  "the  rela- 
tive scarcity  of  fertile  soil  as  necessary  to  the  existence 
of  rent."  If  land  were  as  abundant  as  air  or  light,  it 
would  be  a  free  good.  But  land  will  have  a  value  in 
a  new  country  before  it  begins  to  yield  rent,  because 
provident  individuals  anticipate  a  future  earning  capac- 
ity due  to  the  natural  increase  of  mankind,  for  the  same 
reason  that  value  is  attached  to  young  animals  or  to 
a  share  in  a  promising  enterprise  which  is  a  present 
charge.  "^  The  number  of  years'  rent  to  determine  the 
price  of  land  is  ascertained  by  the  rate  of  profits.  ^^ 

There  is  an  elastic  limit  to  the  supply  of  land;  con- 
sequently, after  the  land  is  occupied,  an  increase  of 
numbers  will  cause  either  a  diminution  in  consumption 
or  an  increase  of  production  through  intensive  cultiva- 
tion. Improvements  in  husbandry  that  enable  a  given 
expenditure  of  labor  to  produce  more,  will  tend  to  main- 
tain a  high  exchange  value  of  labor  in  terms  of  raw 
produce.  "But  though  wages  will  not  fall,  rents  will 
rise,  inasmuch  as  the  same  soil  is  made  to  yield  a  greater 
return."  ^"^  Tucker  here  refers  to  commodity-rent  and 
commodity-wages,  and  argues  that  rents  rise  faster  than 
wages. 

He  thinks,  however,  that  in  only  a  few  rare  cases  do 
improvements  keep  pace  with  the  progress  of  popula- 
tion, and  that  in  general  the  increase  of  population  com- 

"  Tucker,   Wages,.  Profits,  and   Rent,   94. 
»7b.,  94-95. 
3»/6.,  95. 
«>/«>.,  98. 


98  THE    RICARDIAN    RENT    THEORY 

pels  diminished  consumption,  and  the  substitution  of 
coarser  for  dearer  commodities.  *^  The  value  of  wages 
falls,  usually,  in  comparison  with  the  value  of  raw 
produce,  "in  consequence  of  the  increased  competition 
of  the  labourers;  and,  as  the  same  amount  of  raw 
produce  will  progressively  command  more  and  more 
labour  in  the  market,  rents  will  rise  in  proportion."  *^ 
It  is  clear  that,  to  Tucker,  a  rise  in  rent  means  a  rise 
in  proportion  to  labor. 

Reasoning  evidently  on  the  entrepreneur  cost  basis,  ^^ 
he  said : 

By  reason  of  the  fall  in  the  price  of  labour,  soils  of  inferior 
fertility  may  then  repay  the  cost  of  cultivation,  which  they 
would  not  have  done  at  the  previous  rate  of  wages.  The  addi- 
tion to  the  amount  of  raw  produce  thus  made,  retards  the 
further  decrease  of  wages.  .  .  .  But  if  the  soil  was  of 
uniform  fertility,  then,  when  it  was  all  taken  into  cultivation, 
the  means  of  subsistence  for  further  accession  of  numbers 
could  be  furnished  only  by  one  of  the  two  first  mentioned 
modes,  that  is,  either  by  a  more  productive  husbandry,  or  by 
cheaper  modes  of  subsistence.  The  first  of  these  expedients 
tends  to  keep  down  the  price  of  raw  produce  compared  with 
labour ;  the  last  to  raise  it ;  but  both  of  them  contribute  to 
increased  rents,  because  both  enable  the  landlord  to  command 
more  labour  from  the  produce  of  the  same  land.  *^ 

He  concludes  that  differences  in  qualities  of  soils  have 
no  agency  in  producing  rent,  that  rent  arises  "from  the 
greater  amount  of  labour  which  the  products  of  the 
same  portion  of  soil  can  command,  in  consequence  of 

*^  Ih.,   98-99. 

^  It  woiild  indeed  be  difficult  to  determine  whether  Tucker's  work 
should  be  classed  as  a  theory  of  prosperity  or  as  a  theory  of  distribu- 
tion. There  is  a  constant  shift  back  and  forth  between  money  and  com- 
modity-rent and  money  and  commodity-wages.  He  reasons  with  these 
unlike  terms  in  the  same  sentence  oftentimes  as  if  they  were  one.  His 
book  begins  with  a  brilliant  exposition  of  subjective  value ;  but  often 
he  shifts  value  on  to  a  labor-cost  basis,  then  from  a  labor-cost  theory  of 
value  on  to  a  subsistence  basis.  He  varies  back  and  forth  from  labor  as  a 
cause  to  labor  as  a  measure  of  value.  Again  he  enters  into  the  realm 
of  entrepreneur  of  money-outlay  costs  without  detecting  the  change.  Yet 
to  Tucker  a  cost  is  a  cost,  and  a  like  conclusion  must  follow. 

"  Tucker,    Wages,  Profits,  and  Rent,   99. 


GEORGE   TUCKER  99 

the  increase  of  population,"  that  the  greater  the  supply 
of  fertile  soil  the  greater  is  the  amount  of  rent.  *' 

This  reasoning  is  clearly  in  accord  with  the  thesis 
of  Malthus'  Essay,  which  is  that  abundance  and  the 
growth  of  population  relative  to  that  abundance  is  the 
explanation  of  the  progress  of  rent.  *®  Indeed  a  com- 
parison of  the  views  of  Malthus  on  rent  with  those  of 
Tucker,  makes  it  clear  that  Tucker  was  profoundly  in- 
fluenced by  the  writings  of  Malthus.  Malthus  lays  down 
three  causes  of  rent,  *^  and  emphasizes  the  first  two 
quite  to  the  exclusion  of  the  third.  It  is  significant  that 
Ricardo  bases  his  rent  doctrine  on  the  third  cause  given 
by  Malthus  and  practically  excludes  the  first  two,  while 
Tucker  bases  his  doctrine  on  the  first  two  and  usually 
excludes  the  third. 

"It  thus  appears,"  said  Tucker,  "that  cultivated  land 
yields  a  rent  from  two  causes,  and  only  two :  first,  from 
the  capacity  of  the  earth  to  return  a  greater  amount  of 
raw  produce  than  is  expended  in  its  cultivation;  and 
secondly,  from  the  increasing  demand  for  this  excess 
by  the  increase  of  population,  so  that  more  labour  will 
be  given  in  exchange  for  raw  produce  than  it  has  cost 
to  produce  it."  ** 

While  Malthus  regards  differences  in  fertility  of  land 
as  significant.  Tucker,  more  logically,  regards  variations 
in  the  soil  as  of  no  theoretical  importance.  But  Malthus^ 
main  thesis  is  Tucker's  main  thesis :  the  capacity  of 
the  earth  to  produce  a  surplus  though  at  a  diminishing 

«/&.,  100-101. 

**  Malthus'   Nature  and  Progress  of  Rent,   19,   23. 

^  "First,  and  mainly,  that  quality  of  the  earth,  by  which  it  can  be 
made  to  jneld  a  greater  portion  of  the  necessaries  of  life  than  is  re- 
quired for  the  maintenance  of  the  persons  employed  on  the  land.  Secondly, 
that  quality  peculiar  to  the  necessaries  of  life  of  being  able  to  create 
their  own  demand,  or  to  raise  up  a  number  of  demanders  in  proportion 
to  the  quantity  of  necessaries  produced.  And  thirdly,  the  comparative 
scarcity  of  the  most  fertile  land.     lb.,  15. 

<*  Tucker,  Wages,  Profits,  and  Rent. 


100  THE    RICARDIAN    RENT    THEORY 

rate  and  the  growth  of  population  relative  to  this  surplus, 
produce  the  twofold  effect  of  lowering  wages  and  of 
forcing  up  the  value  of  this  surplus.  Both  center  atten- 
tion upon  the  relationship  between  the  value  of  labor 
and  the  value  of  raw  produce.  Tucker's  law  of  substi- 
tution that  enables  the  land  to  feed  more  people  is  a 
variation  of  Malthus'  bounty-of -nature  argument.  Ex- 
ceptions in  both  writers  are  numerous ;  but,  despite  these, 
both  saw  the  value  of  raw  produce  to  be  regulated  by 
the  law  of  supply  and  demand  rather  than  by  cost.  Both 
emphasized  labor  as  a  measure  rather  than  as  a  cause 
of  value. 

In  contradiction  to  Ricardo's  teaching,  Tucker  was 
of  the  opinion  that  whatever  increases  the  quantity  of 
raw  produce  lowers  the  price  of  it  and  raises  rent. 
Whether  it  be  fertility,  favorable  seasons,  improved 
modes  of  husbandry,  manures,  or  more  skillful  modes 
of  cultivation,  the  effect  must  be  a  tendency  to  lower 
the  price  of  raw  produce.  But  it  would  not  follow 
from  this  that  rents  must  decline.  Lowering  of  price 
does  not  diminish  rent,  because  the  elasticity  of  con- 
sumption, even  with  the  same  population,  will  not  allow 
prices  to  fall  to  the  extent  that  raw  produce  would 
rise  in  amount.  The  supply  of  precious  metals  was,  he 
states,  increased  ten-fold  after  the  discovery  of  America, 
but  the  value  of  a  given  unit  of  the  precious  metals  was 
lowered  not  over  one-third.  *^  Tucker's  idea  of  the 
elasticity  of  consumption  has  quite  superseded  Ricardo's 
dictum  that  man's  desires  are  limited  by  the  narrow 
capacity  of  the  human  stomach. 

To  summarize  here  some  of  the  chief  arguments  so 
far  reviewed  may  prove  helpful.  He  has  taught  that 
value  is  subjective  or  individualistic.     Though  it  cannot 

»/&.,   102-103. 


GEORGE   TUCKER  loi 

be  measured  or  expressed  by  objective  goods,  yet  it  can 
be  approximately  expressed  in  relation  to  goods  in  the 
open  market  where,  through  mutual  competition,  the 
estimates  of  individuals  tend  to  conform  to  common 
standards.  The  fundamental  law  determining  value  is 
that  of  supply  and  demand.  But  commodities,  other 
than  those  produced  by  nature,  find  their  supply-limita- 
tion determined  by  their  labor-cost ;  therefore  value 
tends  to  conform  to,  but  is  not  the  result  of,  labor-cost. 
Self-love,  seeking  gratification,  leads  to  demand  and 
supply  through  which  price  is  fixed. 

Applying  this  reasoning  to  the  population-rent  prob- 
lem, he  finds  that  on  the  demand  side  are  to  be  con- 
sidered: (a)  the  law  of  population,  (b)  the  elasticity 
of  demands,  and  (c)  the  forces  of  distribution.  These 
considerations  are  disposed  of  as  follows :  the  rate  of 
the  increase  of  population  varies  inversely  as  its  density ; 
demands  accommodate  themselves  to  the  supply,  increas- 
ing with  the  augmentation  of  wealth  and  diminishing 
with  the  diminution  of  wealth;  the  forces  of  distribu- 
tion operate  to  the  advantage  of  the  landlord  who  en- 
joys a  monopoly  return,  and  give  advantage  to  the  cap- 
italist over  the  laborer  who  in  case  of  pressure  must 
abate  in  wages  or  starve. 

On  the  supply  side  are  to  be  considered:  (a)  forces 
limiting  the  supply  of  products,  and  (b)  the  kind  of 
product.  Forces  limiting  product  are :  climate,  fertility, 
kind  of  seed,  skill,  method,  improvements,  secret  meth- 
ods, desire  for  present  over  future  consumption  which 
limits  the  supply  of  present  capital,  and  the  law  of  dimin- 
ishing returns.  The  kind  of  product  involves  such  con- 
siderations as  whether  beef  or  potatoes  are  to  be  pro- 
duced. 

Rent  is   considered  in  two  ways :  as  a  payment  by 


I02  THE    RICARDIAN    RENT    THEORY 

one  person  to  another,  and  as  a  commodity  return.  It 
arises  out  of  the  bountifulness  of  nature,  together  with 
an  augmenting  population.  Increased  production  tends 
to  lower  the  price  of  raw  produce,  but,  because  of  the 
elasticity  of  demands,  prices  do  not  fall  to  the  extent 
that  production  is  augmented;  therefore  an  increase  of 
commodity-rents  means  an  increase  of  total  value-rents. 
Exchange-value  is  measured  by  labor-cost;  therefore  a 
rise  in  value-rents  is  equivalent  to  a  fall  in  real  wages. 

We  will  now  turn  to  Tucker's  criticism  of  Ricardo's 
theory  of  rent.  After  stating  Ricardo's  theory,  he  of- 
fered three  objections  to  it :  first,  the  diversity  of  soil 
has  no  agency  in  creating  rent ;  second,  the  rise  of  raw 
produce  is  the  cause  rather  than  the  consequence  of 
the  resort  to  inferior  soils;  third,  a  rise  in  raw  produce 
means  a  fall  in  real  wages.  ^°  The  third  objection  has 
already  been  discussed. 

On  the  first,  he  reasons  that  the  result  of  an  increase 
of  raw  produce  is  a  multiplication  of  laborers,  and  grow- 
ing numbers  produce  competition  that  lowers  wages  rela- 
tive to  raw  produce.  It  follows  that,  through  time,  raw 
produce  comes  to  have  greater  purchasing  power  in  gen- 
eral. Natural  forces  tend  to  augment  the  landlord's 
purchasing  power  irrespective  of  a   difference  in  soil. 

In  his  second  objection  to  Ricardo   (the  rise  of  raw 

^  lb.,  108.  Not  only  does  Tucker's  argument,  overlook  the  growing 
demand  of  labor  in  this  course  of  development,  but  also  he  makes  raw 
produce  both  the  supply  and  the  demand.  That  is  to  say,  while  raw 
produce  is  itself  the  supply,  it  is  also  that  which  determines  the  number 
of  people  who  are  to  demand  it.  Man's  free  agency  is  subordinated  to 
natural  forces.  But,  says  he,  supply  and  demand  produce  value,  and 
value  in  turn  causes  more  production.  This  makes  causes  beget  causes, 
and  converts  man  into  a  kind  of  irrational  being  whose  course  is  deter- 
mined by  the  fertility  of  the  soil  as  truly  as  is  the  course  of  a  leaf  deter- 
mined by  the  direction  of  the  stream  upon  which  the  forces  of  nature 
have   caused   it   to  fall. 

This  same  conclusion  must  follow  the  reasoning  of  Malthus,  and  in  a 
slightly  different  way,  the  powers  of  nature  are  steering  Ricardo's  helpless 
economic  man  to  the  minimum-of-subsistence  margin.  'The  laws  of  natural 
science  and  the  doctrine  of  the  Physiocrats  had  a  hold  too  firm  upon  the 
scientific  mind  of  that  time  to  permit  the  laws  of  moral  philosopliy  to 
hold  their  tnie  place  in  the  development  of  science. 


GEORGE  TUCKER  103 

produce  is  the  cause  rather  than  the  consequence  of  the 
resort  to  inferior  soils),  Tucker  said,  "It  is  justly  re- 
marked by  Ricardo  that  'corn  is  not  high  because  a 
rent  is  paid,  but  a  rent  is  paid  because  corn  is  high'; 
but  it  is  equally  true  that  corn  is  high,  not  as  he  sup- 
poses, because  'more  labour  is  employed  in  the  produc- 
tion of  the  last  portion  obtained,'  but  more  labour  is  thus 
employed  because  corn  is  high."  ^^ 

His  reasons  for  the  rise  of  raw  produce  are  two : 
the  increased  demand,  and  the  greater  amount  of  labor 
for  which  produce  will  exchange.  But  the  second  rea- 
son is  precisely  what  Tucker  elsewhere  calls  the  high 
price  itself. 

"Without  doubt,"  said  Tucker,  "...  successive 
resorts  to  inferior  soils,  or  outlays  of  fresh  capital  on 
old  lands  keep  pace  with  the  rise  of  raw  produce ;  they 
ordinarily  afford  a  measure  of  the  progress  of  rent, 
but  they  are  no  more  the  cause  of  its  rise,  than 
the  weights  on  one  scale  cause  the  gravity  of  the  body 
in  the  opposite  scale,  though  they  may  correctly  inform 
us  of  its  amount."  ^- 

In  this  regard,  his  thought  so  strictly  conforms  to 
Senior's  encyclopedic  article,  to  which  Tucker  makes 
reference,  ^^  that  there  is  reason  to  suspect  an  influence 
by  Senior  over  him.  Senior  wrote,  "And  yet  it  is  clear 
that  if  we  suppose  the  existence  of  a  populous  and 
opulent  district  of  great  but  uniform  fertility,  giving  a 
large  return  to  a  given  expenditure  of  capital,  but  incap- 
able of  giving  any  return  whatever  on  a  less  expenditure, 
or  any  greater  return  on  a  larger  expenditure,  such  a 
district  would  afiford  a  high  rent  though  every  rood  of 

«/6.,  111-112. 

6=  Tucker,  lb.,   133. 

^Ib.,  122. 


I04  THE    RICARDIAN    RENT    THEORY 

land  and  every  portion  of  the  capital  applied  to  it  would 
be  equally  productive."  ^* 

As  for  diminishing  returns,  we  have  seen  that 
Ricardo's  concept  could  serve  only  for  static  condi- 
tions. Malthus  had  the  concept  of  historical  diminish- 
ing returns,  or  of  a  process  of  transition  from  one 
static  state  of  returns  to  society  as  a  whole  to  another 
such  static  state.  But  to  him  the  dynamics  of  different 
factors  were  unequal,  and  the  consequent  disproportion- 
ality  meant  a  minimum  of  subsistence.  Tucker's  con- 
cept is  Malthus'  concept  improved.  Tucker  makes  far 
more  allowance  for  improvements  in  husbandry,  and 
emphasized  over  and  over  the  idea  of  consumption  being 
modified  or  changed  to  meet  the  new  circumstances. 

Credit  is  due  Tucker  for  being  the  first,  apparently, 
to  make  use  of  the  law  of  limited  returns.  ^^  It  is  diffi- 
cult to  pick  out  a  single  quotation  from  Tucker  either 
to  prove  that  he  adequately  presented  this  law,  or  to 
give  a  clear  idea  of  his  conception.  The  idea  runs 
throughout  the  work  and  at  no  place  finds  precise  state- 
ment or  definition.  Tucker  often  assumes  fundamental 
principles  as  commonplace,  and  fails  to  give  them  formal 
expression. 

At  one  place,  he  said : 

There  are  millions  of  acres,  on  our  large  rivers,  and  in 
the  western  country,  which  at  a  small  additional  expense,  would 
produce  their  maximum,  or  so  near  it  that  no  further  outlay 
of  capital  could  increase  their  product  ten  per  cent.  But  what- 
ever might  be  the  effect  of  these  expedients,  it  is  clear  that 
they  have  their  limits,  and  that,  if  the  population  went  on 
increasing,  the  time  must  come  when  there  could  be  no  further 
conversion  of  other  lands  into  arable,  and  when  the  arts  of 
husbandry  would  admit  of  no  material  improvement.     In  that 

"/b.,  122. 

"^Professor  Patten  overlooks  Tucker  when  he  considers  that  his  (Pat- 
ten's) Premises  of  Political  Economy  (1885)  contained  the  first  presenta- 
tion of  this  law. 


GEORGE   TUCKER  105 

case,  the  further  demand  of  increasing  numbers  could  be  met 
only  by  an  alteration  either  in  the  quantity  or  quality  of  an 
individual's  subsistence.  ^®  ...  It  may  be  remarked,  by 
the  way,  that  the  political  economists  of  the  Ricardo  school 
seem  to  assume  that  upon  all  lands  successive  portions  of  capital 
can  be  expended  so  as,  in  a  diminishing  ratio,  to  increase  the 
amount  of  its  produce.  But  this  is  true  onl}^  with  the  inferior 
soils,  and  not  even  with  them  to  the  extent  supposed.  ^^ 

The  reason  he  makes  a  partial  exception  for  inferior 
soils  is  that  such  soils,  as  other  parts  of  the  book  indi- 
cate, give  a  larger  proportional  return  to  manure  and 
other  soil-improvements,  and  that  the  duration  of  the 
period  until  it  reaches  the  point  of  maximum  returns  is 
longer. 

Professor  Patten  gives  a  clear  expression  of  the  idea : 

All  writers,  in  discussing  the  law  of  diminishing  productive- 
ness of  the  soil,  have  accepted,  without  dispute,  the  assumption 
that  the  return  for  labor  from  a  given  tract  of  land  could  be 
continually  increased  by  the  use  of  more  labor,  the  point  con- 
troverted having  been  whether  or  not  the  additional  labor  con- 
tained a  greater  or  less  proportional  return  than  the  previous 
labor.  Both  parties  seem  to  have  overlooked  the  third  alterna- 
tive, that  the  proportional  return  might  increase  up  to  a  point 
beyond  which  no  additional  return  could  be  obtained  by  any 
amount  of  labor.  If  this  were  true,  we  would  have  a  law  of 
limited  returns  as  contrasted  with  a  law  of  diminishing  re- 
turns. ^® 

This  means  that,  beyond  a  certain  point,  additional 
numbers  cannot  be  provided  for  at  all.  Both  the  culti- 
vation of  poorer  soils  and  the  higher  prices  of  food  are 
accounted  for  by  the  law  of  limited  as  well  as  by  that 
of  diminishing  returns.  That  superior  lands  cannot  sup- 
ply the  market  has  been  thought  to  demonstrate  the  fact 
of  a  limit  to  the  productive  power  of  land.  ^^ 

Tucker  and  later  writers  in  discussing  this  concept, 

^Tucker,   Wages,  Profits,  and  Rent,  116-117. 

^  lb.,  117,  note. 

»  Patten,  Premises  of  Political  Economy,   152.      ^  lb.,   152-153. 


Io6  THE    RICARDIAN    RENT    THEORY 

have  in  mind  commodity-returns  only.  This  fact,  in 
my  judgment,  renders  the  concept  one  impossible  of  any 
practical  application,  because  production  would  cease 
when  cost  came  to  equal  value-returns.  This  point,  as 
both  reason  and  experience  show,  must  be  reached  long 
before  an  actual  physical  limit  to  returns  is  attained. 
Cultivation  would  be  arrested  even  when  population  be- 
comes most  dense,  because  of  the  principle  of  propor- 
tionality. Cultivation  will  cease  at  the  point  where  cost 
equals  value-return  and  not  at  the  point  of  maximum 
physical  return. 

This  concept  is  necessarily  static.  It  could  be  true 
only  under  given  conditions.  Under  a  condition,  for 
instance,  where  horses  are  used  for  plowing,  one  team 
of  horses  can  get  the  maximum  return  from  a  given 
plow  within  a  given  time;  under  another  condition, 
where  steam  is  used,  one  engine  could  get  a  larger  max- 
imum return  from  this  plow.  At  each  time,  the  maxi- 
mum return  is  produced;  but  the  returns  are  different 
at  the  two  times  to  the  extent  that  the  engine  is  swifter 
than  the  team.  The  productive  capacity  or  supply  of 
any  factor  is  always  limited  by  the  conditions  and  com- 
bination of  forces  of  which  it  is  a  part.  The  same 
reasoning  applies  to  different  stages  of  agriculture,  and 
to  different  stages  of  progress. 

This  concept  must  also  be  considered  in  relation  to 
the  prevailing  habits  of  consumption,  since  consumption 
determines  the  nature  of  demands,  and  demands,  in  turn, 
determine  what  commodities  must  be  produced.  The 
cost  outlay  required  to  reach  limited  returns  would  vary 
with  the  classes  of  commodities  that  are  to  be  produced. 
Land  cultivated  to  a  point  of  limited  returns  for  superior 
food  (e.g.,  beef)  would  support  few  as  compared  with 
the  same  tract  used  for  less  costly  food  (e.g.,  potatoes). 


GEORGE   TUCKER  107 

A  dynamic  theory  of  consumption  teaches  that,  as  popu- 
lation advances,  consumption  requires  a  greater  variety 
and  a  superior  quahty  of  goods.  Now,  in  a  more  ad- 
vanced state  of  civilization,  the  earth  could  support  more 
people  to  the  extent  that  consumption  is  varied,  since  a 
greater  variety  of  margins  with  limited  returns  could 
be  attained.  But,  to  the  extent  that  superior  quality 
is  demanded,  the  earth  could  support  fewer  people  be- 
cause no  limited-returns  margin  could  yield  as  much  food 
of  a  superior  as  of  an  inferior  quality.  Turning  now 
to  Tucker's  concept  of  consumption,  which,  as  popula- 
tion grows  more  dense,  tends  toward  a  less  variety  and 
a  cheaper,  coarser  quality  of  food,  we  find  that  opposite 
reasoning  would  apply. 

It  is  debatable  under  which  of  these  forms  of  con- 
sumption the  earth  could  support  the  greater  number  of 
people.  But  certainly  the  greatest  number  could  be 
supported  under  a  form  of  consumption  which  combines 
the  qualities  of  greatest  variety,  thus  making  available 
various  grades  of  land,  and  the  cheapest  quality  which 
would  enable  each  variety  of  land  to  yield  the  maximum 
nutriment. 

The  application  of  this  principle  to  all  classes  of  pro- 
ductive agents  can  be  easily  made,  but  is  beyond  our 
present  task.  The  nature  of  consumption,  which  in- 
cludes the  standard  of  tastes  must  reckon  with  the  kind 
as  well  as  the  variety  of  consumable  goods;  then  the 
nature  of  consumption  is  but  one  end  of  the  stick  of 
which  the  coordination  of  productive  factors  to  supply 
that  consumption  is  the  other. 

Though  recent  writers  have  made  much  of  this  law 
of  limited  returns,  is  there  anything  in  it  except  a  modi- 
fied statement  of  diminishing  returns?  It  simply  places 
a  limit  at  which,  if  ever  reached,  diminishing  returns 


lo8  THE    RICARDIAN    RENT    THEORY 

would  become  stationary  returns.  Everything  the  con- 
cept could  embrace  is  embodied  in  the  law  of  propor- 
tionality, and  the  ultimate  limit  of  returns  is,  as  I  have 
indicated,  at  the  point  of  maximum  value-returns  and 
not  at  the  point  of  maximum  physical  returns.  To  ad- 
here to  the  idea  of  physically  limited  returns  is  to  shift 
from  an  economic  to  a  physical  basis  of  reasoning. 

In  this  chapter,  we  have  found  that  George  Tucker 
was  a  scholar  and  statesman  whose  thought  upon  eco- 
nomic questions  was  in  many  respects  far  in  advance 
of  his  time.  His  subjective  theory  of  value  is  essentially 
the  same  as  that  held  by  leading  thinkers  of  the  modern 
psychological  school.  Regarding  value  as  an  individual 
estimate,  he  reasoned  that  the  market  price  of  a  good 
need  not  necessarily  correspond  with  the  value  which 
either  purchaser  or  seller  attaches  to  it.  But  he  rea- 
soned that,  in  the  process  of  purchases  and  sales,  the 
traders  come  to  think  in  common  terms  and  to  adjust 
their  thought  more  or  less  to  a  common  basis.  In  keep- 
ing with  the  subjective  theory  of  value,  he  finds  that 
population  is  regulated  by  volitional  control,  and  that 
volitional  control  so  works  that  numbers  increase  in- 
versely as  the  density  of  population.  He  classifies  land 
as  capital  at  times,  and  teaches  that  land-rent  and  profits 
obey  the  same  laws.  He  regards  rent  as  a  surplus,  and 
brings  out  the  concept  of  quasi-rents.  In  every  case,  he 
regards  rent  as  well  as  profits  a  deduction  from  the  law 
of  diminishing  returns ;  he  looks  upon  variations  in  the 
soil  as  of  no  theoretical  importance.  Malthus  and  Tucker 
used  the  same  bases  in  their  rent  problem.  But  in  fair- 
ness to  Tucker  it  may  be  said  that  he  advanced  the 
problem  much  farther  than  where  Malthus  had  left  it, 
I  should  classify  Tucker  as  one  of  the  ablest  American 


GEORGE  TUCKER  109 

economists  under  review  if  not  one  of  the  ablest  thinkers 
on  the  subject  that  this  country  has  ever  produced.  The 
next  chapter,  devoted  to  Henry  C.  Carey,  will  point  out 
specifically  and  in  detail  the  differences  in  the  prevailing 
points  of  view  in  the  United  States  and  in  England. 


CHAPTER  VI 
HENRY  CHARLES  CAREY 

THE  environment,  early  career,  and  personal 
characteristics  of  Carey  (1793-1879)  decided- 
ly influenced  his  thought.  It  is  necessary, 
therefore,  briefly  to  review  these  influences.  Carey's 
voluminous  writings  began  in  1835,  and  continued  to 
appear  throughout  a  period  of  unprecedented  industrial 
development.  The  population  increased  32.7  per  cent 
from  1830  to  1840,  and  35.9  per  cent  during  the  next 
decade.  The  wealth  per  capita  in  i860  was  more  than 
double  that  of  1840.  The  growth  of  factories  and  indus- 
tries, of  inventions  and  skill,  compose  an  amazing  chap- 
ter in  material  civilization.  During  the  two  decades 
after  1830,  the  railroad  mileage  grew  from  29  to  9,021 
miles.  Philadelphia,  the  home  of  Carey  and  most  of 
his  followers,  was  the  railroad  center.  Though  spread 
over  a  vast  area,  the  population  of  the  country  main- 
tained political  continuity  while  it  was  incorporating  vast 
bodies  of  immigrants.  Under  a  new  and  liberal  form 
of  government,  a  growth  of  national  feeling  was  mani- 
fest. The  extension  of  transportation  facilities  was 
uniting  diverse  interests  into  common  interests,  was 
bringing  the  farm  into  touch  with  the  manufacturing 
cities,  and  was  emphasizing  that  unity  of  national  inter- 
ests which  formed  so  clear  a  basis  for  the  "principle  of 
association,"  which  was  the  fundamental  tenet  of  the 
Carey  School. 

Good  prices  and  home  markets  gave  encouragement 
to  agriculture,  while  the  growth  of  skill,  capital,  and 
superior  equipment  made  possible  the  utilization  of  the 


HENRY    CHARLES    CAREY  m 

more  fertile  lowlands  where  resistance  to  cultivation  was 
greatest.  Observation  of  these  facts  led  Carey  to  deny 
the  Ricardian  order  of  cultivation.  The  land  was  owned 
for  the  most  part  by  the  great  middle  class  in  the  form 
of  average-sized  farms.  In  America,  the  title  landlord 
was  no  mark  of  distinction.  There  was  no  distinct  city 
class  as  opposed  to  an  agricultural  class.  Americans 
had  inherited  no  association  of  ideas  from  the  Middle 
Ages  which  would  lead  to  an  artificial  differentiation 
between  natural  agents  and  other  forms  of  wealth ;  and 
no  inherited  fixity  of  relation  existed  between  the  land- 
lord and  the  serf.  Land,  like  other  forms  of  capital, 
was  subject  to  frequent  purchase  and  sale.  Frontier 
lands  were  almost  free;  consequently  the  value  of  a 
cultivated  farm  was  hardly  more  than  the  cost  of  its 
improvement.  These  facts  caused  Carey  to  believe  that 
the  value  of  land  was  determined  by  its  cost  of  'repro- 
duction. The  law  of  diminishing  returns  in  agriculture, 
though  never  denied,  had  found  no  serious  consideration 
at  the  hands  of  any  American  economist  previous  to 
Carey.  Very  naturally,  the  majority  of  American  econ- 
omists spoke  of  land  as  capital,  and  the  Carey  School 
wrote  much  in  defense  of  this  idea. 

In  the  midst  of  dynamic  progression,  the  population 
was  versatile  and  optimistic.  N.  W.  Senior  said  of  this 
country:  "They  have  afforded  a  field  in  which  the 
powers  of  population  have  been  allowed  to  exhaust  their 
energy;  but  though  exerted  to  their  utmost  they  have 
not  equalled  the  progress  of  subsistence.  Whole  col- 
onies of  the  first  settlers  perished  from  absolute  want; 
their  successors  struggled  long  against  hardship  and  pri- 
vation; but  every  increase  of  their  numbers  seems  to 
have  been  accompanied  or  preceded  by  increased  means 
of  support."^     Alfred  Marshall  says  : 

*  Senior,   N.   W.,   Two  Lectures  on  Population,  49. 


112  THE   RICARDIAN    RENT    THEORY 

"The  Englishman  Mill  bursts  into  unwonted  enthusi- 
asm when  speaking  of  the  pleasure  of  wandering  alone 
in  beautiful  scenery ;  and  many  American  writers  give 
fervid  descriptions  of  the  growing  richness  of  human 
life  as  the  backwoodsman  finds  neighbours  settling 
around  him,  as  the  backwoods  settlement  develops  into 
a  village,  the  village  into  a  town,  and  the  town  into  a 
vast  city."  - 

There  was  not  a  time  between  1830  and  i860  when 
an  increase  of  population  would  not  have  been  desirable. 
We  are  not  surprised  to  learn  that  Malthusianism  was 
unpopular,  and  that  a  growth  of  numbers  was  regarded 
as  an  indication  of  prosperity.  With  such  conditions, 
it  was  natural  that  progress  should  be  considered  the 
normal  law  of  economic  life;  and  that  a  dynamic  law 
of  increasing  returns  should  be  developed  by  our  econ- 
omists rather  than  a  law  of  diminishing  returns.  Na- 
tional growth  together  with  a  vigorous  optimism  tended 
to  reverse  the  tenets  of  the  Maltho-Ricardian  School. 
Carey's  optimistic  philosophy  was  born  under  favorable 
auspices.  This  was  a  period  of  partial  reaction  in  Eng- 
land; a  juncture  when  the  deductions  from  a  few  as- 
sumed premises  seemed  hardly  adjustable  to  the  condi- 
tions of  actual  life. 

From  his  ninth  year,  Carey  was  associated  with  his 
father  in  the  business  of  publishing  and  selling  books. 
The  firm  "Carey  and  Lea,"  of  which  H.  C.  Carey  became 
a  partner  in  1814,  was  the  leading  publishing  house  in 
America.  He  read  most  of  the  works  sent  in  for  pub- 
lication and  republication.  In  this  way,  he  secured  his 
education.  His  assiduous  labors  and  good  memory  soon 
made  him  the  best  equipped  economist  in  the  United 
States.  ^ 

*  Marshall,  A.,  Principle's,  321  n. 

*  Elder,  Wm.,  Memoir  of  H.  O.  Carey,  32.    Livermore,  C.  H.,  Polit.  Set. 


HENRY    CHARLES    CAREY  113 

"Thirteen  octavo  volumes  and  three  thousand  pages 
of  pamphlets  remain  as  the  fruit  of  his  activity,  besides 
an  amount  of  matter,  supposed  to  be  twice  as  great,  con- 
tributed by  him  to  the  newspaper  press.  Of  his  more 
important  works,  there  are  translations  in  French,  Ital- 
ian, Portuguese,  German,  Swedish,  Russian,  Magyar, 
and  Japanese."  *  Practically  the  whole  of  his  philosophy, 
however,  may  be  found  in  his  Principles  of  Social 
Science. 

At  the  age  of  forty-two,  there  occurred  two  important 
events  in  his  history:  (i)  he  retired  from  business  with 
a  considerable  fortune,  and  (2)  he  published  his  famous 
Essay  on  the  Rate  of  Wages.  ^  The  immediate  cause  of 
this  essay  was  his  reading  the  lectures  by  Senior  on  The 
Cost  of  Obtaining  Money  and  The  Rate  of  Wages.  With 
Senior,  he  held  to  the  wage-fund  doctrine ;  but,  contrary 
to  Senior,  he  emphasized  "real  wages"  rather  than 
"money- wages . " 

It  is  interesting  to  note  that,  in  his  first  essay,  he  advo- 
cated many  of  the  classical  theories.  He  held  to  the 
wage-fund  doctrine,  and  advocated  free  trade;  yet  there 
are  embodied  in  this  essay  many  of  the  teachings  which 
compose  his  later  system  of  thought. 

Carey  was  unsympathetic  with  an  opponent.  His 
iterations  were  vigorous.  In  Elder's  Memoir  we  find 
statements  indicating  that  his  economy  took  something 
of  the  tone  and  temper  of  national  prejudice.  "His 
father,  Mathew  Carey,  was  an  Irish  patriot,  a  political 
exile  from  the  land  of  his  birth.  Something  hereditary 
may  be  detected  running,  with  much  of  the  pristine 
force  of  blood,  through  the  life  and  character  of  the 

Qr.,  V,  553.     Thompson,  R.  E.,  Article  "Carey"  in  Stoddard's  Amer.  sup. 
to  Ency.  Brit. 

*  Dunbar,   C.  F.,  article  "Carey"  in  Palgrave's  Dictionary. 

'^  Elder,    Wm.,  Memoir,   37. 
Livermore,   C.  H.,  op.   cit.,   554. 


114  THE    RICARDIAN    RENT   THEORY 

son."  ^  "He  sometimes  clinched  his  dehverances  with 
expletives  and  epithets  something  out  of  fashion  in 
society."  ^  An  English  traveler  speaking  of  Mr.  Carey 
to  T.  E.  LesHe  said,  "He  is  a  man  of  plain  speech,  and 
svi^ears  like  a  bargeman  whenever  Mill's  name  is  men- 
tioned." ®  Professor  A.  E.  Perry  states  that  "he  [Carey] 
hated  England  with  all  the  fervor  of  a  Celt"  and  further 
that  "a  temperament  and  a  prejudice  like  this  is  hardly 
favorable  to  processes  of  logical  reasoning."  ®  Leslie 
shares  this  opinion  in  some  degree.  ^° 

But  these  comments  should  riot  be  taken  too  seriously. 
It  is  difficult  to  believe  that  a  man  with  Carey's  superior 
intellect  should  personally  hate  all  Englishmen.  He  was 
much  indebted  to  English  thinkers,  among  others  Spen- 
cer and  Senior ;  and  his  mention  of  some  Englishmen 
is  most  complimentary.  Desire  to  find  the  truth  seems 
to  be  his  one  motive.  Let  an  unfavorable  doctrine  come 
in  his  way,  however,  and  he  remonstrated  with  a  Spar- 
tan-like vigor.  That  he  was  positive  in  his  convictions, 
dogmatic,  wanting  in  judicial  temperament,  over-confi- 
dent, and  too  much  one-sided  on  many  questions,  cannot 
be  denied.  He  was  ultra  optimistic ;  and,  to  all  the  griefs 
and  trials  of  man,  he  was  blinded  by  his  beautiful  prin- 
ciple of  association.  He  was  honest,  profoundly  in 
earnest,  and  labored  with  zeal  for  the  betterment  of 
man. 

Men  of  this  type  compel  reactions.  They  are  admired 
or  disliked,  as  the  case  may  be,  always  in  the  superlative. 
R.  E.  Thompson  thought  that  the  philosophy  presented 
by  Carey  "vindicates  the  ways  of  God  to  man,"  "  and 

"Elder,   Wm.,  Memoir,   31. 
''lb.,  34. 

*  Leslie,  T.  E.,  Political  Economy  in  the  United  States,  Fortnightly 
Review,  1880,  XXXIV,   502,  n.  2. 

^  Perry,  A.  L.,  Political  Economy,  82,  83. 

10  Leslie,  T.  E.,  op.  cit..,  501. 

"  Social  Science  and  National  Economy,  30. 


HENRY    CHARLES    CAREY  115 

Dr.  Elder  thought  that  Carey's  Past,  Present,  and  Fu- 
ture marked  "an  era  in  the  history  of  political  economy, 
from  which  it  may  count  its  A.  U.  C,  its  Hegira,  or 
its  Declaration  of  Independence."  ^-  "On  the  other 
hand,"  says  Livermore,  "the  college  professors  arose 
from  the  perusal  of  Wayland's  Political  Economy  and 
jeered  at  the  unbeliever.  Were  Ricardo,  Malthus,  Mc- 
Culloch,  and  Mill  blind  leaders  of  the  blind?  If  they 
were,  was  it  out  of  New  Jersey  that  a  prophet  should 
arise  with  the  sovereign  balsam  of  feeble  eyesight? 
[Carey  then  lived  in  New  Jersey.]  And  with  one  accord, 
they  all  cried  the  louder :  'Great  is  laissez  faire  of  the 
Ricardians.'  " 

Mr.  Livermore's  statement  is  very  apt,  for  Carey  has 
had  a  small  following  among  college  professors.  But  in 
newspapers,  politics,  and  campaign  literature,  possibly 
few  men  for  fully  a  half  century  were  quoted  more  on 
the  tariff.  His  following  among  publicists  has  been 
large.  He  was  an  adviser  to  President  Lincoln  and  to 
Secretary  Chase.  ^^ 

Carey's  extremely  optimistic  temperament  was  one 
reason  for  his  opposition  to  Malthus  and  Ricardo.  Dif- 
ferences of  opinion  often  find  their  origin  in  differences 
of  temperament.  The  scientist,  as  such,  reaches  conclu- 
sions only  through  impersonal  reasoning.  Man,  as  such, 
too  often  has  his  conclusions  biased  by  his  own  tempera- 
ment. The  difficulty  is  that  the  scientist  and  the  man 
are  inseparable.  There  being  two  sides  to  most  ques- 
tions, there  is  opportunity  for  the  human  element  to 
load  the  evidence  in  favor  of  this  contention  or  that. 
Ricardo  was  pessimistic ;  Carey  was  optimistic.  Ricardo 
loaded  the  evidence  from  the  English  conditions  of  181 5  ; 

'^''Memoir,  26. 

1^  Livermore,   op.  cit.,   571. 


Ii6  THE    RICARDIAN    RENT    THEORY 

Carey  loaded  the  evidence  from  the  American  conditions 
of  1848." 

The  purpose  of  this  chapter  is  to  present  briefly 
Carey's  theory  of  rent  and  to  contrast  his  views  with 
those  of  Ricardo  especially  as  to  the  law  of  diminish- 
ing returns.  We  shall  find  that,  contrary  to  the  general 
opinion,  Carey  never  denied  the  theory  of  diminishing 
returns  in  the  sense  that  Ricardo  taught  it. 

In  order  to  follow  Carey's  criticism  of  Ricardian  rent, 
I  shall  briefly  review  Carey's  arguments  on  population. 
Carey  overlooked  the  social  phenomena  that  followed  the 
Second  Hundred  Years'  War  between  England  and 
France.  He  maintained  that  the  origin  of  the  theory 
of  population  that  Ricardo  had  in  mind,  Malthusianism, 
was  to  be  found  in  the  commercial  policy  of  England.  ^^ 
Following  in  the  lead  of  the  American  economists,  ^^ 
Rae,  ^'  Wayland,  ^^  Vethake,^''  Cardozo,  -°  and  Phillips,-^ 
and  of  Senior  ^^  in  England,  Mr.  Carey  argues  at  length 
to  prove  that  Malthus'  geometrical  and  arithmetrical 
ratios  are  impossible.  -^  God  in  his  all-goodness,  reasons 
Carey,  provides  for  man.  He  admits  that  men  perish. 
This,  however,  is  not  due  to  the  niggardliness  of  nature, 
but  to  the  insufficiency  of  men.  ^* 

Chemistry  teaches,  he  argues,  that  a  dense  population 

1*  Franklin,  A  Select  Collection  of  Scarce  and  Valuable  Economical 
Tracts,  215.  Smith,  Adam,  Wealth  of  Nations,  I,  72.  Everett,  A.  H., 
New  Ideas  on  Population,  Chaps.  2-3.  Senior,  N.  W.,  Two  Lectures  on 
Population,   49.      Marshall,  A.,   Principles,   321-322,   note. 

^  Carey,  Principles  of  Social  Science,   I,   464. 

1*  It  would  be  better  to  say,  in  keeping  with  American  thought. 

"Rae,  John,  The  Sociological  Theory  of  Capital   (N.  Y.,  1905),  392. 

18  Wayland,  F.,  Elements  of  Political  Economy    (Boston,  1859),  302. 

1*  Vethake,  Henry,  The  Principles  of  Political  Economy  (Philadelphia, 
1838),  116. 

-"Cardozo,  J.  N.,  Notes  on  Political  Economy  (Charleston,  S.  C,  1826), 
35-36. 

^Phillips,  Willard,  A  Manual  of  Political  Economy  (Boston,  1828), 
139. 

-'' Senior,  N.  W.,  Two  Lectures  on  Population  (London,  1831),  Lee.  II, 
46-52. 

^Social  Science,  III,  267,  and  349-350. 

2*/&.,  350. 


HENRY    CHARLES    CAREY  117 

is  necessary  for  the  well-being  of  man.  -^  Space  will  not 
permit  a  full  presentation  of  his  arguments  under  this 
head  of  his  discussion.  Because  of  the  increase  in  pop- 
ulation, the  growth  of  association,  capital,  and  skill, 
which  result,  will  cause  the  land  to  yield  more  food; 
and  by  reason  of  a  law  of  substitution  which  accom- 
panies the  advancement  of  civilization,  man  comes  to 
have  less  need  for  the  products  of  the  land.  Man  be- 
comes more  and  more  dependent  on  plant  life!  Plants, 
on  their  side,  must  have  carbonic  acid  gas,  which  is 
furnished  them  by  the  breath  of  animals.  A  dense  pop- 
ulation will  supply  the  needed  animal  breath,  and  ani- 
mals, a  discordant  element  in  his  principle  of  associa- 
tion, will  gradually  disappear.  Thus,  man  producing 
the  carbonic  acid  gas  and  plants  the  oxygen,  give  us 
an  example  of  that  "perfect"  economic  harmony  which 
runs  through  his  writings. 

Carey's  last  and  most  important  argument  is  that 
man's  cerebral  and  reproductive  functions  become  antag- 
onistic through  development.  Population  is  self-regula- 
tive. The  power  to  maintain  individual  life  and  the 
power  to  propagate  the  species  must  vary  inversely  if 
over-population  be  avoided.  If  a  race  continues  to  exist, 
the  forces  destructive  of  it  and  the  forces  preservative 
of  it  must  tend  toward  equilibrium.  -^ 

In  this  argument,  we  find  Carey's  ultimate  check  to 
over-population.  To  read  only  his  first  three  argu- 
ments, one  concludes  that  Carey  had  in  mind  no  con- 
ceivable limit  to  the  propagation  of  man.  Economic 
historians  have,  for  the  most  part,  overlooked  his  claim 
that  population  is  self-regulative.  Professor  Roscher, 
for   example,   maintained   that   Carey   had   in   mind   no 

^Ib.,  319-320.     Cf.  ib.,  II,  269;  III,  315,  318,  325,  327. 
"Op.   cit..  Ill,   46. 


Ii8  THE    RICARDIAN    RENT    THEORY 

check  to  over-population  and  cited  Carey's  Past,  Present, 
and  Future  and  Principles  of  Social  Science  to  substan- 
tiate his  contention.  '^  It  is  true  that  when,  in  1848,  he 
wrote  his  Past,  Present,  and  Future,  he  had  not  devel- 
oped the  argument,  and  frankly  stated  that  "the  time 
may  arrive  when  the  world  will  be  so  fully  occupied 
that  there  will  not  be  even  standing  room."  -^  But  be- 
tween 1848  and  1858-59,  the  date  when  he  brought  out 
his  Principles  of  Social  Science,  appeared  Herbert  Spen- 
cer's famous  article  on  population"®  (1852),  which  sup- 
plied Mr.  Carey  with  an  ultimate  check  to  over-popula- 
tion, thus  rounding  out  his  theory.  ^°  Carey's  argument 
is  that  there  is  no  minimum-of-subsistence  margin,  nor 
any  over-population  problem.  ^^ 

Having  mentioned  his  arguments  on  population,  as 
well  as  the  industrial  and  personal  conditions  that  in- 
fluenced them,  I  shall  follow  his  approach  to  the  rent 
problem  a  little  farther  by  briefly  presenting  certain  con- 
cepts that  are  of  the  substance  of  the  problem  itself. 

Carey,  as  we  shall  see,  regards  land  as  a  form  of 
capital,  and  makes  rent  virtually  synonymous  with  in- 
terest. Rent  and  interest  find  their  origin  in  the  con- 
flict, so  to  say,  between  the  power  of  nature's  control 
over  man  and  the  power  of  man's  control  over  nature. 
In  proportion  to  other  shares  of  the  distribuendum,  rent 
and  interest  are  high  when  nature's  control  is  stronger, 
and  low  when  man's  control  is  stronger. 

Concepts  having  to  do  with  man's  control  over  nature 

^  Roscher,  Principles  of  Political  Economy  (Chicago,  1882),  sec.  cclxii, 
note  1. 

^  Past,  Present,  and  Future    (Philadelphia,   1848),   77. 

^  A  Theory  of  Population,  deduced  from  the  General  Latu  of  Animal 
Fertility,  in   Westminster  Review,  April,   1852. 

^  Principles  of  Social  Science,  chap.   46. 

^1  Professor  Haney  says  that  Carey  preceded  Spencer  in  this  theory: 
History  of  Economic  Thought  (N.  Y.,  1911),  247.  Professor  R.  E. 
Thompson  also  makes  this  mistake:  Stoddard's  Encycl.,  Amer.  supple- 
ment to  Encycl.  Brit.,  I,  722. 


HENRY    CHARLES    CAREY  119 

are  wealth,  utility,  and  capital.  "Wealth  consists  in  the 
power  to  command  the  always  gratuitous  services  of 
nature."  ^-  "Wealth  grows  with  the  growth  of  man's 
power  over  nature.  The  more  that  growth,  the  more 
feeble  becomes  nature's  resistance,  and  the  greater  is 
the  tendency  toward  acceleration  of  progress  in  the  fur- 
ther growth  of  wealth."  ^^  "The  utility  of  things  is  the 
measure  of  man's  power  over  nature."  ^*  "Capital  is 
the  instrument  by  means  of  which  that  mastery  is  ac- 
quired." ^^  In  what  does  capital  consist  ?  Carey  says, 
"At  one  moment  in  the  form  of  food ;  at  another,  in 
that  of  physical  and  mental  force ;  and,  at  a  third,  in 
that  of  bows,  arrows,  canoes,  ships,  lands,  houses,  fur- 
naces, and  mills."  ^^  He  speaks  of  "further  accumula- 
tion of  capital  in  the  form  of  that  higher  intelligence."  ^^ 
Capital,  then,  is  both  objective  and  subjective.  Carey  is 
obscure  on  this  point.  He  considers  interest  a  payment 
for  the  use  of  capital.  Land  is  capital,  so  it  would 
seem  that  a  payment  for  the  use  of  land  would  be  inter- 
est. Rent,  however,  is  spoken  of  as  a  payment  for  the 
use  of  land ;  so  rent  and  interest  would  be  the  same — 
interest  on  land  would  be  rent.     Man  also  is  capital. 

^Principles  of  Social  Science,  186.  In  his  Miscellaneous  Works,  the 
article  "Wealth:  Of  What  Does  It  Consist?"  he  defines  the  term  thus: 
"Wealth  consists  of  the  power  to  command  the  services  of  the  always 
gratuitous  forces  of  nature"  (5-6).  Further,  "Of  all  tests  of  the  growth 
of  wealth  the  most  certain  is  that  which  is  found  in  the  comparative 
power  of  a  people  for  the  production  and  consumption  of  iron"  (lb., 
10-11).  His  environment  in  Philadelpia  possibly  had  something  to  do 
with  his  exalted  opinion  of  the  iron  industry  and  his  advocacy  of  pro- 
tection. The  poet  Bryant  (for  more  than  half  a  century  editor  of  the 
New  York  Evening  Post)  thought  Carey's  opposition  to  orthodox  economy 
was  due  to  mercenary  motives  (Carey's  Miscellaneous  Works;  article, 
"Financial  Crises:  Their  Causes  and  Effects":  Bryant  quoted  15-16). 
T.  E.  Leslie  thought  Carey's  economy  as  much  a  product  of  Pennsyl- 
vania as  was  its  iron  and  coal  (Fortnightly  Review,  1880,  XXXIV,  503). 
Professor  Perry  was  of  the  same  opinion  as  Leslie  (Political  Economy, 
18th  ed.,   83). 

^Miscellaneous  Works.  Article,  "Wealth:  Of  What  Does  It  Consist!" 
11. 

^*  Principles  of  Social  Science,  I,  179. 

^Ib.,  Ill,  50. 

^Ib. 

^''Ib. 


120  THE    RICARDIAN    RENT    THEORY 

Why,  then,  would  not  wages  be  interest?  Wages  and 
interest,  however,  are  regulated  by  different  laws.  They 
move  up  or  down  in  opposite  directions.  These  remarks 
are  justified  by  statements  throughout  his  works  and  by 
criticisms  of  him  on  his  confusion  of  terminology. 

Concepts  having  to  do  with  nature's  control  over 
man  are  value  and  cost  of  reproduction.  "Value  is  the 
measure  of  the  resistance  to  be  overcome  in  obtaining 
those  commodities  or  things  required  for  our  purposes 
— of  the  power  of  nature  over  man."  ^*  In  the  same 
chapter,  we  are  told  that  the  idea  of  value  "is  simply 
our  estimate  of  the  resistance  to  be  overcome,  before 
we  can  enter  upon  the  possession  of  the  thing  desired."  ^^ 
This  chapter  contains  expressions  of  which  the  follow- 
ing are  characteristic :  "What  are  the  things  to  which 
he  attaches  the  idea  of  value?"  "He  attaches  no  value 
to  the  light."  "How  much  is  the  value  he  attaches  to 
the  chair  upon  which  he  sits?"  etc.,  etc. 

One  of  the  definitions  quoted  above  is  subjective  and 
the  other  objective.  The  relative  values  of  commodities 
are  determined  by  their  labor-cost  of  reproduction.  "In 
exchanging,  the  most  obvious  mode  is  to  give  labor  for 
labor."  *°  For  short,  value  :  value  : :  labor-cost  of  repro- 
duction :  labor-cost  of  reproduction.  ^^ 

His  greatest  confusion  comes  from  attributing  value 
to  man.  Of  the  utility  of  man  he  says,  "The  greater 
that  utility,  the  higher  is  his  own  value,  and  the  less 
that  of  the  things  he  needs.  The  cost  of  reproduction 
steadily   declining,   he  himself   as   steadily  rises,   every 

^  Principles  of  Social  Science,  I,   158. 

^  lb.,  148. 

«>/b.,  151. 

*i  Marshall  makes  Carey's  value  a  money-cost-of-reproduction  concept. 
Carey  himself,  on  the  value  of  a  good,  spoke  of  the  human  effort  re- 
quired for  its  reproduction  (Cf.  Marshall,  op.  cit.,  401,  Carey,  Principles 
of  Social  Science,  I,  151).  Marshall  says  normal  cost  of  reproduction  and 
normal  cost  of  production  are  convertible  terms    {lb.,  401). 


HENRY    CHARLES    CAREY  121 

reduction  in  the  value  of  existing  capital  being  so  much 
added  to  the  value  of  the  man."  *-  "The  value  of  man, 
like  that  of  all  other  commodities  and  things,  is  meas- 
ured by  the  cost  of  reproduction,  and  not  by  that  of 
production."  ^^ 

These  statements  are  not  in  harmony  with  value  as 
nature's  control  over  man.  They  indicate  that  value  is 
man's  power  over  nature.  How  does  this  differ  from 
wealth,  man's  power  over  nature?  How  does  the  idea 
that  "a  greater  utility  in  man  means  a  higher  value  in 
man"  harmonize  with  "the  two  [value  and  utility]  ** 
thus  move  in  opposite  directions,  and  are  always  found 
existing  in  the  inverse  ratio  of  each  other"  ?  ^^  Incon- 
sistencies such  as  these  confuse  the  argument.  Yet  the 
general  relationship  seems  to  be  that  value  is  nature's 
power  over  man  and  that  it  is  limited  by  cost  of  repro- 
duction. Wealth  is  man's  power  over  nature,  utility  is 
the  measure  of  this  power,  and  capital  consists  in  the 
means  or  instruments  which  give  this  power.  *® 

Since  rent  is  a  payment  for  the  use  of  land,  it  is  pro- 
portionately high  or  low  as  the  value  of  the  land  is  high 
or  low.    This  leads  us  to  the  rent  problem. 

On  rent,  *^  he  presents  two  arguments:  (a)  Land  is 
capital;  rents  grow  proportionately  less;  (b)  The  natural 
order  of  cultivation  is  from  poor  land  to  rich. 

First.  Land  is  capital.  The  clay  through  which  the 
farmer  guides  his  plow  is  subject  to  exactly  the  same 
law  as  when  it  has  passed  through  the  potter's  hands 

*" Principles   of  Social   Science,   III,    111. 

*»/b.,  130. 

♦*  Parenthesis   mine. 

*^  Principles  of  Social  Science,  I,   179. 

*«  Roscher,  Principles  of  Political  Economy,  I,  sec.  5,  note  4. 

*' Principles  of  Social  Science,  I,  v.  Speaking  of  his  work  of  1837, 
Carey  said  of  himself,  "He  had  already  satisfied  himself,  that  the  theory 
presented  for  consideration  by  Mr.  Ricardo,  not  being  universally  true, 
had  no  claim  to  be  so  considered;  but  it  was  not  until  ten  years  later 
that  he  was  led  to  remark  the  fact  that  it  was  universally   false." 


122  THE    RICAEIDIAN    RENT    THEORY 

and  has  been  converted  into  china  and  earthenware.  It 
is  a  universal  law  that  governs  matter.  *^ 

"If  we  can  show  that  the  land  heretofore  appropriated 
is  not  only  not  worth  as  much  labor  as  it  has  cost  to 
produce  it  in  its  present  condition,  but  that  it  could  not 
be  reproduced  by  the  labor  that  its  present  value  would 
purchase,  it  would  be  obvious  to  the  reader  that  its 
whole  value  is  due  to  that  which  has  been  applied  to 
its  improvement."  *^  Again,  "There  is  not,  throughout 
the  United  States,  a  county,  township,  town,  or  city, 
that  would  sell  for  cost;  or  one  whose  rents  are  equal 
to  the  interest  upon  the  labor  and  capital  expended."  ^^ 
Quotations  and  arguments  from  his  works  might  extend 
over  pages,  all  to  the  effect  that  capital  in  land  differs 
in  no  respect  from  that  invested  in  machines.  In  fact. 
President  Walker  remarks  that,  "The  trouble  with  Mr. 
Carey's  argument  is   its   super-abundance  of  proof."  ^^ 

In  other  words,  before  appropriation,  land  is  a  free 
good,  like  air  and  water.  Its  value  is  due  to  the  labor 
employed  in  its  appropriation  and  improvement.  ^-  "Im- 
provements" is  broad  enough  to  include  roads,  canals, 
churches,  and  the  like.  ^^  Land  being  capital,  rent  is 
only  a  form  of  interest.  As  progress,  invention,  and 
skill  advance,  the  cost  of  reproduction  declines.  There- 
fore rents  proportionately  decline;  proportionately,  of 
course,  to  the  products  of  the  land.  ^* 

^Principles  of  Social  Science,  I,   164. 

**  Principles  of  Political  Economy,  I,  102. 

^  Past,  Present,  and  Future,  60;  almost  the  same  wording  in  Principles 
of  Social  Science,  I,   168. 

"Walker,  F.  A.,  Land  and  its  Rent,   77. 

52  Principles  of  Political  Economy,  I,  129,   130. 

^Principles  of  Social  Science,   I,    168. 

^  Doubtless  J.  S.  Mill  and  F.  A.  Walker  are  the  strongest,  at  least 
among  the  strongest,  critics  of  Carey's  cost-of-reproduction  concept.  Mill 
omits  cost  of  reproduction  in  his  criticism  of  the  point.  Take  this  from 
his  argument,  and  Carey  himself  would  not  recognize  it.  J.  S.  Mill, 
Principles  of  Political  Economy  (Ashley  ed.,  London  and  New  York, 
1909),  430-432.  See  MacLeod,  The  History  of  Economics,  London 
(1896),  590-.592,  on  self-contradiction  of  Mill  on  rent.  Walker  makes 
the    stronger    criticism    {Land    and    Its    Rent,    75-88).      In    a    later    work 


HENRY   CHARLES   CAREY  123 

Second.  The  natural  order  of  cultivation  is  from  poor 
to  rich  soils,  from  the  dry,  sandy  soil  of  the  hillside 
to  the  rich  lands  of  the  valley.  Since  this  argument  is 
aimed  at  Ricardo,  we  will  give  it  as  follows:  (i)  Incon- 
sistencies of  Ricardo.  (2)  Why  Ricardian  rent  is  gen- 
erally accepted.  (3)  It  depends  on  a  single  supposition. 
(4)  Statement  of  Carey's  argument.  (5)  Deduction: 
rent  proportionately  declines. 

After  an  introduction  replete  with  irony  as  to  Ricar- 
do's  "great  discovery,"  he  turns  to  the  college  professors 
and  compares  them  to  the  followers  of  Mohamet  in 
regard  to  the  Koran.  Their  insolvable  task  is  to  deter- 
mine what  it  is  they  are  required  to  believe.  Those  who 
follow  Ricardo  are  economists  par  excellence :  anything 
short  of  absolute  faith  in  him  is  heresy,  worthy  of  ex- 
communication, contemptible.  The  professor  "having 
studied  carefully  the  works  of  the  most  eminent  of  the 
recent  writers  on  the  subject,  and  having  found  no  two 
of  them  to  agree,  he  turns,  in  despair,  to  Ricardo  him- 
self, and  there  he  finds,  in  the  celebrated  chapter  on 
rent,  contradictions  that  cannot  be  reconciled,  and  a 
series  of  complications  such  as  never  before,  as  we 
believe,  was  found  in  the  same  number  of  lines.  The 
more  he  studies,  the  more  he  is  puzzled,  and  the  less 
difficulty  does  he  find  in  accounting  for  the  variety  of 
doctrines  taught  by  men  who  profess  to  belong  to  the 
same  school,  and  who  all  agree,  if  in  little  else,  in  regard- 
ing the  new  theory  of  rent  as  the  great  discovery  of  the 
age."  ^^ 

this  atithor  advocates  cost  of  reproduction.  He  speaks  of  it  as  "beyond 
the  reach  of  discussion,"  {International  Bimetallism,  25-29).  Professor 
J.  W.  Jenks  expressed  the  opinion  that  Carey's  theory  of  a  constant 
decline  in  value,  including  agricultural  products,  is  that  he  had  in  his 
mind's  eye  the  United  States  where,  as  a  result  of  free  and  abundant 
fertile  lands,  agricultural  produce  had  still  a  low  cost  of  production 
(Jenks,  Henry  O.   Carey  as  Nationalokonom,   30,   31). 

^ Past,  Present,  and  Future,  17-18    (quotation   from  p.  18). 


124  THE    RICARDIAN    RENT    THEORY 

Why,  then,  is  Ricardo's  theory  generally  accepted? 

At  first  sight,  it  looks,  however,  to  be  exceedingly  simple. 
Rent  is  said  to  be  paid  for  land  of  the  first  quality,  yielding 
one  hundred  quarters  in  return  to  a  given  quantity  of  labor, 
when  it  becomes  necessary-,  with  the  increase  of  population, 
to  cultivate  land  of  the  second  quality,  capable  of  yielding  but 
ninety  quarters  in  return  to  the  same  quantity  of  labor;  and 
the  amount  of  rent  then  paid  for  No.  i  is  equal  to  the  differ- 
ence between  their  respective  products.  No  proposition  could 
be  calculated  to  command  more  universal  assent.  Every  man 
who  hears  it  sees  around  him  land  that  pays  rent.  He  sees 
that  that  which  yields  forty  bushels  to  the  acre  pays  more  rent 
than  that  which  yields  but  thirty,  and  that  the  difference  is 
nearly  equal  to  the  difference  of  product.  He  becomes  at  once 
a  disciple  of  Mr.  Ricardo,  admitting  that  the  reason  prices  are 
paid  for  the  use  of  land  is  that  soils  are  different  in  their 
qualities,  when  he  would,  at  the  same  moment,  regard  it  as 
in  the  highest  degree  absurd  if  any  one  were  to  undertake 
to  prove  that  prices  are  paid  for  oxen  because  one  ox  is  heavier 
than  another ;  that  rents  are  paid  for  houses  because  some 
will  accommodate  twenty  persons  and  others  only  ten ;  or  that 
all  ships  command  freights  because  some  ships  differ  from 
others  in  their  capacit}'.  ^^ 

Ricardo's  whole  theory  is  based  upon  a  single  sup- 
position. After  reducing  the  theory  to  six  brief  state- 
ments, he  (Carey)  says,  "It  will  be  perceived  that  the 
whole  system  is  based  upon  the  assertion  of  the  exist- 
ence of  a  single  fact,  viz.,  that  in  the  commencement  of 
cultivation,  when  population  is  small,  and  land  conse- 
quently abundant,  the  soils  capable  of  yielding  the  largest 
return  to  any  given  quantity  of  labor  alone  are  culti- 
vated. That  fact  exists  or  it  does  not.  If  it  has  no 
existence,  the  system  falls  to  the  ground.  That  it  does 
not  exist ;  that  it  never  has  existed  in  any  country  what- 
soever; and  that  it  is  contrary  to  the  nature  of  things 
that  it  should  have  existed,  or  can  exist,  we  propose  now 
to  show."  ^^ 

^Ib.,  18,   19. 
^  lb.,  23. 


HENRY    CHARLES    CAREY  125 

So  much  for  Ricardo's  single  supposition  and  what 
Carey  proposes  to  show.  What  is  Carey's  argument 
on  the  point?  He  reverses  the  Ricardian  order  of  cul- 
tivation. In  the  first  settlement  of  a  new  country, 
Ricardo  thinks  that  No.  i,  the  40-bushels-to-the-acre 
tract,  would  be  first  occupied.  When  population  multi- 
plies to  the  extent  that  it  is  necessary  to  cultivate  No.  2, 
then  rent  begins  on  No.  i — the  rent  being  the  difference 
between  the  two,  or  10;  and  so  on. 

In  the  first  settlement  of  a  new  country,  Carey  thinks 
that  the  poorest  tract,  say  No.  5,  will  first  be  occupied; 
and,  with  the  growth  of  population  and  wealth,  4,  3,  2, 
and  I  will  successively  come  into  cultivation.  Carey's 
reasons  are  that  the  richer  lands  offer  greater  resist- 
ance than  half -civilized  men,  or  needy  colonists,  or  the 
few  new  settlers  in  a  virgin  land  with  small  capital  and 
no  organization,  can  overcome.  The  most  fertile  lands 
are  covered  with  dense  forests ;  among  the  most  general 
difficulties  are  swamps  or  marshes,  bogs,  and  malaria. 
Through  the  growth  of  population,  capital,  and  associa- 
tion, such  power  over  nature  is  acquired  as  will  make 
possible  the  utilization  of  the  most  fertile  soils.  ^^ 

From  this,  it  follows  that  constantly  increasing  re- 
turns result,  and  "there  is  a  steady  diminution  in  the 
proportion  of  the  population  required  for  producing  the 
means  of  subsistence,  and  as  steadily  an  increase  in  the 
proportion  that  may  apply  themselves  to  producing  the 
other  comforts,  conveniences,  and  luxuries  of  life."  ^^ 

Continuing,  we  find  that,  "Rent  is  paid  for  the  im- 
provements which  labor  has  accomplished  for,  or  on, 
land,  and  which  constitute  items  of  wealth.  Wealth 
tends  to  augment  with  population,   and  the  power   of 

•*  lb.,  chap.  I ;   also  Principles  of  Social  Science,  I,  chaps.  4,   5. 
^  Past,  Present,  and  Future,  25. 


126  THE    RICARDIAN    RENT    THEORY 

accumulating  further  wealth  increases  with  constantly 
accelerating  pace  as  new  soils  are  brought  into  cultiva- 
tion, each  yielding  in  succession  a  larger  return  to  labor. 
Rent  tends,  therefore,  to  increase  in  amount  with  the 
growth  of  wealth  and  population,"  *^°  etc.  But,  while 
there  is  an  increase  in  the  amount  of  rent,  it  must  be 
remembered  that  rent  or  the  price  charged  for  the  use 
of  land,  like  prices  of  all  commodities  and  things,  is  but 
compensation  for  the  results  of  past  labor.  As  cost  of 
production  becomes  less,  prices  are  lowered.  Therefore, 
though  total  rents  increase,  rent  as  a  share  of  the  pro- 
duce of  land  decreases  proportionately.  ^^ 

So  much  for  Carey's  arguments  on  rent  and  the  rela- 
tion of  rent  to  kindred  problems.  I  shall  conclude  with 
a  comparison  of  these  writers,  hoping  thereby  that 
Carey's  attitude  toward  Ricardo  may  be  better  under- 
stood. 

Ricardo  lived  in  pessimistic  England  at  the  close  of 
the  Second  Hundred  Years'  War  with  France;  Carey 
lived  in  optimistic  America  during  her  golden  age  of 
prosperity  after  1837.  The  first  wrote  in  the  England 
of  1817;  the  second  wrote  in  the  America  of  1848. 
Ricardo  was  pessimistic — things  would  have  been  bet- 
ter if  they  had  not  been  so  bad;  Carey  was  optimistic 
— things  will  be  better  because  nature  is  so  good.  The 
first  accounted  for  misery  through  the  niggardliness  of 
nature ;  the  second  accounted  for  misery  through  the 
fault  of  man.  Ricardo  was  a  free-trader;  Carey  was  a 
protectionist.  The  Malthusian  law  of  population  and 
the  Ricardian  theory  of  rent  rest  on  one  and  the  same 
hypothesis :  the  limited  supply  and  diminishing  product- 
iveness of  land  in  its  relation  to  human  fecundity  with 

^Ib.,  62. 

^^  Principles  of  Social  Science,  I,   164. 


HENRY    CHARLES    CAREY  127 

undiminishing  power.  Carey's  doctrine  of  population 
and  theory  of  rent  are  based  on  the  principle  of  an 
increasing  supply  of  land  in  its  relation  to  human  fecund- 
ity— that  fecundity  diminishing  with  the  development  of 
man.  With  Ricardo,  labor  accounts  for  the  value  of 
most  man-made  goods ;  with  Carey,  labor  accounts  for 
the  value  of  land  and  other  goods.  Ricardo's  order 
of  cultivation  was  from  rich  land  to  poor;  Carey's  order 
of  cultivation  was  from  poor  land  to  rich;  Ricardo's 
rent  concept  is  static :  though  he  taught  historical  dimin- 
ishing returns,  his  formula  can  serve  only  for  measur- 
ing static  or  unalterable  conditions.  Carey's  rent  con- 
cept is  dynamic :  he  looks  upon  society  as  progressive, 
multiplying  in  inventions  and  skill  and  increasing  its 
returns  as  it  grows.  Ricardo  regarded  land  as  a  dis- 
tinct factor  of  production ;  Carey  regarded  land  as  cap- 
ital. With  Ricardo,  rent  is  a  differential  surplus  above 
a  no-rent  margin ;  with  Carey,  rent  is  interest  on  capital 
in  the  form  of  land.  The  first  thought  that  improve- 
ments caused  a  decrease  in  total  rent ;  the  second  thought 
that  improvements  caused  an  increase  in  total  rent. 
Ricardo  taught  that  rent  increased  while  labor  received 
less  and  less  on  a  declining  margin ;  Carey  taught  that 
rent  proportionately  declined  while  labor  received  pro- 
portionately more  and  more  on  a  rising  margin.  To  one, 
increased  numbers  meant  diminishing  returns  and  ris- 
ing rents  at  the  expense  of  profits  and  wages;  to  the 
other,  increased  numbers  meant  increasing  returns  and 
rising  wages  at  the  expense  of  rents  and  profits.  Both 
were  successful  business  men.  Neither  was  a  college 
man.  Either  ranked  as  the  strongest  contemporary  econ- 
omist of  his  nation.  After  all,  the  fundamental,  the 
one  point  between  Carey  and  Ricardo,  in  this  connection, 
is  diminishing  returns.     It  is  true  that  Carey  said  "no" 


128  THE    RICARDIAN    RENT   THEORY 

when  Ricardo  said  "yes" ;  Carey  considered  his  doctrine 
the  direct  opposite  of  that  taught  by  Ricardo.  Differ- 
ences in  the  order  of  cuUivation  present  no  fundamental 
distinction  in  this  question.  The  philosophy  of  Ricardian 
rent  refers  to  lands  under  cultivation  at  the  same  time. 
Recent  studies  justify  Carey's  contention  in  many  in- 
stances as  to  the  historic  order  of  cultivation.  Grant 
the  point,  yet  Ricardo's  law  of  rent  is  untouched.  Not 
historic  orders,  but  lands  under  cultivation  at  the  same 
time,  present  the  basis  for  a  differential  rent-doctrine. 

That  Carey  said  "no"  when  Ricardo  said  "yes,"  is 
taken  by  critics  to  be  the  backward  and  forward  looking 
faces  of  the  same  proposition.  This,  however,  is  but 
another  instance  of  the  common  fallacy  of  mistaking 
different  things  for  the  same  thing.  This  I  will  show 
through  a  consideration  of  the  essence  of  the  whole 
controversy — diminishing  returns. 

Since  Carey  was  not  specific  on  the  point,  he  leaves 
us  to  interpret  his  fundamental,  possibly  his  subconscious 
philosophy  of  this  question.  In  my  judgment,  there  are 
three,  and  only  three,  possible  interpretations : 

1.  There  is  a  declining  demand  for  commodities  as 
society  approaches  a  more  perfect  association,  and  mean- 
while there  are  increasing  returns  from  land.  In  other 
words,  while  the  supply  of  commodities  is  constantly 
increasing,  our  needs  are  constantly  decreasing. 

2.  Another  interpretation — and  that  the  general  one 
— is  that  Carey  denied  outright  the  law  of  diminishing 
returns  as  Ricardo  used  it. 

3.  Carey  passed  by  diminishing  returns  in  agricul- 
ture, and  reasoned  with  a  land-supply  concept  in  mind. 

Regarding  the  first  of  these,  Carey,  after  arguing  for 
a  tendency  to  substitute  vegetable  for  animal  foods,  and 
for  increasing  powers  of  augmenting  supplies  of  neces- 


HENRY    CHARLES    CAREY  129 

sities  as  man  approaches  a  more  perfect  state  of  associa- 
tion, said,  "The  better  his  clothing,  the  less  is  the  waste 
of  his  body,  and  the  less  his  need  for  food."  *-  Further, 
^^  "Look,  therefore,  where  we  may,  we  find,  throughout 
nature,  a  constant  tendency  towards  the  perfect  adapta- 
tion of  the  earth  to  the  wants  of  a  growing  population 
— each  and  every  increase  in  the  power  of  association 
and  combination  being  accompanied  by  diminution  in 
the  quantity  of  raw  material  required  for  the  mainte- 
nance of  human  life,  and  increase  in  that  which  may 
be  obtained  in  return  to  any  given  amount  of  labor."  ** 
Few  men  have  been  criticized  more  severely  than 
Carey,  yet  no  one  has  been  so  cruel  as  to  accuse  him 
of  being  serious  on  this  point.  This  does  not  enter  in 
as  a  part  of  the  body  and  substance  of  his  philosophy. 
It  must  be  considered  alone — isolated  from  the  body  it 
is  presumed  to  serve;  it  is  a  kind  of  philosophical  comet 
blazing  up  for  the  moment,  contrary  alike  to  law,  order, 
and  common  sense.  Why  did  Carey  compel  the  farmers 
to  move  to  more  fertile  soil,  if  the  soil  they  were  on 
was  constantly  increasing  its  returns  and  the  needs  were 
constantly  diminishing?  The  fact  is  that  Carey,  at  this 
point  of  the  discussion,  has  in  mind  a  primitive  econ- 
omy. *'  This  is  no  ultimate  doctrine.  That  animals, 
well  housed  and  protected  from  freezing  weather,  rains, 
and  snow,  require  a  less  amount  of  food  to  preserve 
them  in  the  same  state  of  health  and  vigor,  is  beyond 
discussion.  That  warm  clothing,  sanitation,  and  com- 
fortable housing  for  people  mean  a  less  waste  of  body, 
and  a  somewhat  less  absolute  need  for  food,  is  a  mat- 

^- Principles  of  Sorinl   Science,   III.   318. 

^  lb.,  Ill,  319.     Also  ib.,  chaps.  46,  47,  bear  on  the  point. 

**  Mr.  Carey  should  have  remembered  that  clothing  and  general  com- 
forts make  a  demand  on  the   land   as  miich  as  food  does. 

^^  I  take  it  that  needs  vary  in  relation  to  the  standard  of  living:  in 
a  primitive  economy  needs  are  absolute  essentials ;  in  an  advanced  econ- 
omy they  correspond   to  the   character  of   desires. 


130  THE    RICARDIAN    RENT    THEORY 

ter  of  common  knowledge.  But  at  this  point  the  analogy 
between  men  and  beasts  breaks.  What  the  desires  of 
horses  and  cattle  were  a  thousand  years  ago,  they  are 
to-day.  Man's  desires,  however,  are  progressive;  they 
mount  with  every  additional  opportunity  for  gratifica- 
tion. Desires  are  the  motive  force  of  economic  activity, 
and  it  follows  that  dynamic  progression — the  centre  of 
Carey's  philosophy— is  based  upon  desires  for  more  and 
better  goods.  To  accuse  him,  then,  of  advocating  the 
point  beyond  a  primitive  economy,  or  at  least  beyond 
the  point  where  man  has  secured  conveniences  to  con- 
serve his  animal  heat,  is  to  accuse  him  of  contradic- 
tion so  serious  as  to  wreck  his  whole  philosophy. 

Upon  the  second  possible  interpretation,  much  less 
is  to  be  said.  Ricardo  limited  land,  labor,  and  capital 
to  definite  units,  and  gave  them  a  mathematical  expres- 
sion. Not  to  limit  the  land  factor  is,  I  submit,  to  dodge 
or  pass  over  the  diminishing-returns  issue  in  the  Ricar- 
dian  sense.  This  Carey  did.  There  is  not  a  sentence 
in  his  hundreds  of  pages  on  rent  and  population  which 
claims  that  constant  expenditures  on  a  limited  specific 
area  bring  an  ever  increasing  return.  His  was  a  differ- 
ent theme — from  poor  land  to  fertile,  which  I  shall  term 
a  land-supply  concept.  His  reasoning  was  upon  an  en- 
tirely different  basis.  He  did  not  preach  increasing 
returns  on  a  limited  area  of  land.  *'^  If  a  farm  on  the 
hill-side  showed  constantly  increasing  returns,  it  would 
soon  be  more  productive  than  the  low  lands.  If  the 
farmer's  first  expenditure,  or  first  dose,  on  the  limited 
area,  yields  lo,  his  second  12,  his  third  15,  on  up  to  100 

"•  Sherwood,  S.,  Tendencies  in  American  Economic  Thought.  Professor 
Sherwood  argiies  to  the  effect  that  Carey  did  deny  Rioardinn  diminish- 
ing returns,  and,  so  far  as  I  know,  gives  the  best  available  arprument 
for  that  contention.  Professor  Sherwood,  however,  makes  no  distinction 
between  diminishing  returns  on  a  limited  area  under  static  conditions 
and  diminishing  returns  relative  to  the  whole  industry  over  a  long  period 
of  time    (20-23).     My  contention  is  that  the  two  are  essentially  diflferent. 


HENRY   CHARLES    CAREY  131 

and  beyond,  what  possible  excuse  could  he  have  for 
moving  to  the  low  lands?  There  is  no  evidence  that 
Carey  regarded  the  process  of  moving  as  a  particular 
source  of  large  fortunes. 

While  Ricardo  based  diminishing  returns  upon  his- 
toric conditions,  his  formula  or  his  mathematical  ex- 
pression of  it  was  static,  and  could  serve  only  as  a  meas- 
ure of  static  conditions.  He  assumed  conditions  in  a 
given  state  of  advancement.  At  the  same  time,  he  recog- 
nized the  Malthusian  tendency  of  population  to  out- 
strip the  means  of  subsistence.  Thus  he  yoked  a  static 
with  a  dynamic  concept.  Consequently,  he  over-empha- 
sized the  principle  of  resistance  in  agricultural  industry, 
to  the  neglect  of  inventions  in  the  industry  as  a  whole. 
His  prophecies  as  to  resulting  conditions  were,  conse- 
quently, extremely  pessimistic.  They  have  been  falsified 
both  in  England  and  America.  It  was  this  that  raised 
the  ire  of  optimistic  Carey.  The  conclusion  is  that 
the  first  two  of  these  possible  interpretations  were  not 
entertained  by  Carey.  He  never  thought  that,  as  civil- 
ization took  a  higher  form  and  became  more  complex^ 
our  needs  and  demand  for  goods  would  diminish. 
Neither  did  he  believe  that  the  application  of  more  and 
more  units  of  labor  and  capital  on  a  limited  area  would 
show  constantly  increasing  returns. 

Yet  he  preached  increasing  returns.  This  brings  us 
to  the  third,  and  to  what  I  believe  to  be  the  correct, 
interpretation  of  his  idea  of  returns  from  land.  It  must 
not  be  forgotten  that  his  thought  was  dynamic,  that 
his  environment  was  one  of  growth  and  change,  and 
that,  in  conformity,  his  economy  was  dynamic.  To  him, 
land  was  not  a  fixed  factor  in  production  as  it  was  with 
Ricardo.  The  limited-area  concept  was  absent  from  his 
reasoning.     Diminishing  returns  to  him  were  quite  dif- 


132  THE   RICARDIAN    RENT    THEORY 

ferent  from  a  mere  denial  of  diminishing  returns  in  the 
static  sense  in  which  Ricardo  conceived  them.  The 
problem  to  him  was  a  dynamic  one,  over  a  long  period 
of  time.  He  conceived  returns  in  the  light  of  growing 
skill,  and  of  industrial  and  technical  developments,  that 
multiply  with  the  growth  of  capital  and  population.  In- 
creasing power  results  in  the  better  utilization  of  land, 
in  the  harnessing  of  new  lands,  in  the  substitution  of 
richer,  better  lands  for  old  lands. 

Growing  power  to  increase  the  land-supply  or  real 
productive  power  of  the  earth  was,  I  submit,  the  central 
idea  in  Carey's  reasoning  on  returns.  This  was  no  denial 
of  Ricardian  diminishing  returns.  Their  problems  were 
entirely  different — static  and  dynamic  returns  are  dif- 
ferent species. 

Carey's  writings  are  on  the  border  line,  if  indeed  they 
do  not  suggest  what  I  believe  to  be  a  truer  statement  of 
proportionality  than  has  been  given.  Recent  thought, 
however,  seems  to  owe  more  to  Hobson,  ^^  Clark,  ^^  and 
Cannan,  *'"  because  of  their  extension  of  the  application 
of  the  rent-doctrine,  than  to  older  writings  on  the  sub- 
ject. To  avoid  reading  trains  of  thought  into  Carey 
which  belong  more  to  recent  writers,  I  shall  assume 
full  responsibility  for  the  following  remarks,  which,  it 
is  hoped,  will  present  a  truer  statement  of  the  differ- 
ence between  Ricardo  and  Carey. 

Land,  like  labor,  money,  or  tools,  is  a  productive 
factor.  The  supply  of  productive  factors  is  measured 
by  their  yield  and  not  by  their  bulk.  The  number  of 
laborers  does  not  tell  us  the  supply  or  productive  power 

"^  Hobson,  J.  A.,  Thi>  Law  of  the  Three  Rents,  in  Quar.  Jr.  of  Eco- 
nomirs,    1891,   V,    263-288. 

•*  Clark,  .J.  B.,  Distribution  as  Determined  hy  a  Law  of  Rent,  in  Quar. 
Jr.  of  Eco.,  1891,  V,  289-318;  A  Universal  Law  of  Economic  Variation, 
in   Qunr.  Jr.  of  Eco.,  1894,  VIII,  261,  if. 

"  Cannan,  E.,  Oripin  of  the  Law  of  Diminishing  Returns,  1813-15,  in 
Economic  Journal,   1892,  II,  53-69. 


HENRY    CHARLES    CAREY  133 

of  labor.  We  must  know  of  their  skill,  strength,  and 
organization.  The  number  of  dollars  does  not  tell  us 
the  supply  of  money;  the  value  and  rate  of  turnover 
of  these  dollars  must  be  known.  With  the  land-supply, 
the  case  is  not  different.  The  land-supply  is  the  avail- 
able force  or  power  to  do  the  land-work.  The  land- 
supply  consists  of  available  or  effective  utilities  and  not 
of  potential  utilities  which  may  be  harnessed  in  the 
future,  or  when  new  conditions  arise.  Location,  fertil- 
ity, and  intensity  of  cultivation  must  be  considered,  as 
well  as  area,  when  reasoning  on  the  land-supply. 

Any  productive  agent  is  economically  non-existent 
until  its  potential  utilities  become  effective  utilities.  ''° 
Gold  at  the  bottom  of  the  sea  is  economically  non-exist- 
ent because  it  has  only  potential  utility.  Gold  in  a  na- 
tional bank  is  economically  existent;  it  has  effective 
utility.  The  effective  utility  of  land  is  the  supply  of 
land;  the  swamp  lands,  in  the  Carey  use — all  lands, 
under  given  industrial  conditions,  which  are  beyond 
man's  control,  which  in  no  way  contribute  or  can  be 
made  to  contribute  to  his  needs — are  economically  non- 
existent. They  are  no  part  of  the  economic  supply  of 
land.  No  one  claims  that  fur-bearing  animals  in  the 
wilds  of  Siberia,  beyond  the  reach  of  man,  compose 
a  part  of  the  supply  of  furs.  Yet  their  name  is  legion 
who  affirm  that  the  supply  of  land  is  fixed,  thus  includ- 
ing lands  impossible  of  utilization  under  existing  circum- 
stances. The  greatest  enemy  of  some  of  their  ideas  is 
other  of  their  ideas.  Canals,  like  the  Panama,  that  will 
make   possible   the    drainage   and    cultivation   of   lands 

ToVeblen,  T.,  On  the  Xatnre  of  Capital,  in  Quar.  Jr.  of  Eco.,  August, 
1908,  523.  Commons,  J.  R.,  says,  "The  gifts  of  nature  become  capital 
as  soon  as  they  are  utilized  by  man.  Before  they  are  utilized,  they 
have  no  economic  significance  and  are,  therefore,  neither  capital  nor 
land,  in  the  economic  use  of  those  terms."  The  Distribution  of  Wealth, 
137-138. 


134 


THE    RICARDIAN    RENT    THEORY 


whose  utility  previously  had  not  been  dreamed  of;  rail- 
roads extending  quick,  cheap  transportation  into  the 
interior,  thus  converting  waste  lands  into  corn  and  wheat 
fields;  extensive  systems  of  irrigation  that  banish  na- 
ture's lottery  of  seasons  and  rains — these  are  increasing 
the  effective  utilities,  the  land-supply,  extensively.  Sub- 
soil plowing — working  down  into  the  earth,  building 
upon  the  soil,  any  means  of  more  intensive  cultivation 
— any  means  of  compelling  a  limited  area  to  contribute 
more  to  the  needs  of  man  than  before,  is  to  convert 
potential  into  effective  utilities — to  increase  the  economic 
land-supply.  This  does  not  mean  that  potential  utilities 
are  without  influence  on  supply :  let  the  demand  become 
stronger,  and  force  is  applied  to  the  harnessing  of  poten- 
tial utilities.  It  does  mean  that  potential  utilities  are 
not  a  part  of  the  supply.  Not  to  distinguish  between 
"amount  of  land"  and  land-supply  is  a  source  of  confu- 
sion. "^  More  intensive  and  more  extensive  utilization 
result  in  precisely  the  same  thing — more  effective  util- 
ities, a  greater  land-supply.  For  the  economist  to  reason 
on  the  acre-basis  rather  than  on  an  effective-utility-basis, 
is  to  shift  from  an  economic  to  a  ph3'sical  point  of  view. 
An  acre  of  land  is  an  acre  of  land,  be  it  on  the  top  of  Mt. 
McKinley  or  on  Wall  Street.  What  of  their  productiv- 
ity, their  value,  their  capitalization?  These  are  economic 
questions.  The  acre  is  a  mere  measure,  an  area-test, 
of  a  physical  entity — that  is  all. 

In  old  or  new  lands,  potential  utilities  resist  being 
harnessed ;  some  such  utilities  are  further  than  others 
below  the  margin  of  utilization.  This  is  a  matter  of 
degree,  not  of  kind.  Whether  extensive  or  intensive, 
such  utilities    resist    being    harnessed.     This    may    be 

"Fetter,  F.  A.,  The  Principles  of  Economics  {2d  ed.),  N.  Y.,  1910, 
155-158. 


HENRY   CHARLES    CAREY  135 

termed  "the  principle  of  resistance."  This  brings  us 
to  a  further  conclusion  of  great  significance,  heretofore 
unnoticed,  namely,  that  it  is  impossible  to  tie  down  any 
one  agent  in  our  reasoning  on  proportionality,  and  to 
treat  it  as  a  limited,  or  definitely  fixed,  factor.  These 
truths,  differentiation  between  effective  and  potential 
utilities  in  determining  supply  and  the  principle  of  re- 
sistance, are  applicable  to  all  productive  agents.  They 
are  illustrated  by  the  discussions  on  the  quantity  theory 
of  money.  Their  essence  is  embodied  in  such  expres- 
sions as  "The  nimble  sixpence  does  the  work  of  the  slow 
shilling."  "-  "The  money  force,  or  supply  of  money,  is 
composed  of  two  factors — the  amount  of 
money  and  the  rapidity  of  circulation."  ^^  Resistance 
is  here  implied,  of  course ;  else  one  coin  would  be  a 
national  supply.  The  reasoning  applies  to  horse,  laborer, 
machine,  and  all  productive  agents,  in  the  same  way 
and  for  the  same  reasons  that  it  applies  to  land  and 
money. 

If  it  be  realized  that  a  product  is,  under  complex 
industry,  a  resultant  of  numerous  indirect  agents,  "*  and 
that  all  indirect  agents  are  alike  subject  to  the  "principle 
of  resistance,"  it  follows  that  "diminishing  returns"  is 
simply  a  law  of  proportionality,  with  no  fixed  factors  ; 
and  that  all  factors  are  adjusted,  or  the  attempt  is  to 
adjust  them,  so  that  the  maximum  efficiency  of  produc- 
tion will  result.  Such  adjustment,  equilibrium,  or  pro- 
portionality is  an  industrial  ideal,  and  all  efforts  to 
attain  it  are,  and  must  be,  based  upon  the  general  prin- 
ciple of  resistance. 

In  America,  where  land  was  so  rich  and  abundant, 

'2  Walker,    F.    A.,    Political    Economy     (Adv.    Course,    3d    ed.),    N.    T., 
1888,   131. 
w/6.,  131. 
''*  See  example  of  the  day  laborer's  coat.     Adam  Smith,  op.  cit.,  I,  13. 


136  THE    RICARDIAN    RENT    THEORY 

economic  advancement  was  striving  toward  that  eco- 
nomic goal — a  proportionality  of  factors.  In  a  new 
country,  every  step  approaching  that  proportionality  is 
attended  with  larger  returns  than  the  preceding  step. 
Such  environment  produces  subtle  and  inexplicable 
forces  that  bend  action,  and  force  thought  into  new 
channels.  "American  economists  from  the  time  of 
Carey  have  naturally  thought  of  change  and  progress 
as  normal,  and  have  protested  against  the  assumption 
of  fixity  of  customs,  in  social  institutions,  in  the  land- 
supply,  in  the  labor- force,  and  in  the  industrial  pro- 
cesses." "^  Now  that  the  supply  of  productive  agents 
is  elastic,  and  that  resistance  must  be  overcome  in  secur- 
ing more  effective  utilities  from  these  agents,  and  that 
a  product  is  the  resultant  of  numerous  indirect  agents, 
it  follows  that  the  proper  proportioning  of  these  agents 
must  be  based  on  the  principle  of  resistance  or  diminish- 
ing returns. 

The  entrepreneur's  problem  is  largely  one  of  propor- 
tionality. He  must  so  apportion  productive  factors  as 
to  secure  the  best  adjustment  of  means  and  ends.  He 
must  meet  the  demands  of  the  market.  This  is  a  prob- 
lem of  change  and  progress,  of  living  force  and  move- 
ment; therefore  the  dynamical  problem  of  substitution 
is  ever  confronting  him.  There  is  the  double  problem 
in  proportionality  of  apportioning  the  productive  factors 
and  of  apportioning  the  whole  establishment  to  the  extent 
of  the  market.  This,  should  we  take  the  space  to  argue 
it,  would  lead  to  the  conclusion  that,  when  the  point 
of  greatest  net  return  is  reached,  more  money  would 
not  be  invested  in  the  plant.  The  securing  and  main- 
taining proportionality  is  inseparably  connected  with  the 
principle   of    substitution.      In    fact,    substitution   is   the 

^'Fetter,  F.  A.,  Publications  of  the  American  Economic  Association,  3d 
series,   XI.   No.    1,    135. 


HENRY    CHARLES    CAREY  137 

means  to  that  end.  Now  that  diminishing  returns  is 
common  to  all  productive  agents,  the  proper  apportion- 
ing of  these  factors  in  productive  enterprise  must  be 
based  on  this  general  principle  of  resistance;  therefore 
the  principle  of  substitution  must  work  in  conformity 
with  diminishing  returns.  '" 

In  the  cooperation  of  productive  factors,  the  ideal 
is  to  secure  such  an  adjustment  as  will  yield  the  great- 
est net  return.  More  of  a  single  factor  than  the  ideal 
proportion  demands,  is  unnecessary  cost.  Less  of  a 
single  factor  than  a  proper  apportionment  demands,  indi- 
cates unnecessary  cost  on  the  part  of  the  other  factors 
in  the  cooperation.  Disproportionality  means  diminish- 
ing returns;  substitutions  or  readjustments  that  bring 
about  or  approach  true  proportionality,  will  augment 
returns.  Whether  long  factors  will  be  substituted  for 
short,  or  the  reverse,  is  a  question  partly  of  anticipated 
value- return  and  partly  of  the  comparative  productive 
monopoly  held  by  particular  factors.  For  these  reasons, 
long  factors  will  not  be  increased.  This  would  disobey 
the  law  of  demand  which  tends  to  equalize  marginal 
utilities,  and  would  be  unwise  investment.  In  a  pro- 
ductive establishment,  land,  labor,  and  capital  are  coor- 
dinated; and  each  employs  the  others,  so  to  say.  More- 
over, various  competing  uses  are  demanding  each  of 
these  factors.  A  short  factor  cannot  bid  strongly  enough 
to  cause  an  increase  of  factors  which  are  already  too 
strong  in  the  same  establishment.  If  it  could,  it  must 
be  stronger  than  any  competing  use,  but  this  would  in- 
volve the  absurdity  that  all  competing  uses  are  subject 
to  still  greater  diminishing  returns  than  itself.  In  a 
purely  agricultural  society  where  land,  labor,  and  capital 

■'^  See    Marshall    on    the   relationship   of    the   principle   of   substitution   to 
diminishing  returns,  Principles,   355-356,  435. 


138  THE    RICARDIAN    RENT    THEORY 

are  devoted  almost  exclusively  to  agriculture,  the  range 
of  substitution  is  comparatively  limited.  Alternate  de- 
mands are  few.  Land  in  a  particular  location  gradually 
becomes  the  short  factor  as  labor  and  capital  are  in- 
creased. The  demand  for  adjustment  increases  with  the 
growth  of  disproportionality.  Substitution  must  be 
made;  but,  in  the  very  nature  of  the  case,  the  long 
factors — labor  and  capital — cannot  be  adjusted  to  the 
short  factor,  land.  Land  must  be  adjusted  to  the  other 
two.  It  is  very  evident  that  substitution  is  made  because 
of  diminishing  returns  on  a  limited  area.  Should  we 
assume  long  factors  to  be  adjusted  to  a  short  factor, 
it  is  still  true  that  the  purpose  and  act  of  substitution 
is  based  on  diminishing  returns.  Movement  from  poor 
land  to  rich  is  substitution  based  on  the  land-supply  con- 
cept. Such  substitution  confirms  diminishing  returns  on 
a  limited  area.  '^ 

We  conclude  that  the  supply  of  the  productive  powers 
of  factors  or  their  effective  utilities  is  elastic,  that  resist- 
ance must  be  overcome  in  the  conversion  of  potential 
into  effective  utilities,  and  that  the  problem  of  dispro- 
portionality arises  out  of  differences  in  the  degree  of 
resistance  to  be  overcome  in  apportioning  factors,  or 
in  increasing  the  supply  of  short  factors.  Substitution 
by  avoiding  greatest  resistance  seeks  the  easiest  means 
of  increasing  supply.  To  advocate  the  law  of  substitu- 
tion in  production,  except  in  cases  of  indifference,  is 
logically  to  affirm  diminishing  returns.  The  substitution 
of  new  lands  for  old,  or  the  use  of  new  lands  rather 

''^  In  fact,  this  law  of  substitution  simple  pervades  Carey's  whole 
eoonomy.  Power  over  nature  grows  with  the  substitution  of  improved 
instrtimentalities ;  from  the  use  of  the  park-sadrlle  to  the  railroad  car; 
from  the  canoe  to  the  steamer;  from  the  poorer  to  the  richer  soils; 
from  animal  to  vegetable  products;  from  the  vegetable  to  the  mineral 
kingdom — at  every  stage  substituting  the  cheap  and  abundant  for  the 
costly  and  scarce — thus  progress  is  exhibited  in  the  steady  advancement 
from  savagism  up  to  the  highest  attained  civilization.  (See  Dr.  William 
Elder,  Memoir,  9.)      These  are  of  his  most  common  expressions. 


HENRY    CHARLES    CAREY  139 

than  a  more  intensive  utilization  of  old  lands,  as  popu- 
lation and  capital  grow,  is  based  on  the  law  of  diminish- 
ing returns. 

To  attain  superior  adjustment  of  means  and  ends  is, 
consciously  or  subconsciously,  the  ambition  of  all  busi- 
ness concerns.  It  is  the  aim  of  all  economies.  This 
being  true,  the  very  fact  that  land  was  the  short  factor 
in  the  England  of  1817  and  the  long  factor  in  the  Amer- 
ica of  1848,  helps  us  to  account  for  these  different 
economies. 

With  the  law  of  substitution  in  mind,  of  which  Carey 
made  so  much,  I  hope  we  are  ready  to  state  the  differ- 
ence between  Ricardo  and  Carey  on  returns.  In  con- 
formity with  English  conditions  and  with  the  thought  of 
Malthus  and  especially  Sir  Edward  West,  we  find  that 
Ricardo's  concept  of  diminishing  returns,  his  statement 
of  it,  and  his  mathematical  expression  of  it,  were  static, 
and  were  confined  to  a  limited  area. 

In  conformity  with  rapidly  changing  conditions  in 
the  United  States,  and  with  his  own  way  of  thinking, 
Carey's  concept  of  returns  was  dynamic.  He  thought 
of  returns  over  a  long  period  of  time  and  without  limit 
as  to  area.  Taking  this  view  of  the  question,  only  false 
reasoning  could  lead  him  to  any  other  conclusion  than 
that  returns  from  land  would  increase  with  the  growth 
of  skill  and  science,  of  population  and  wealth. 

Static  diminishing  returns  and  dynamic  increasing  re- 
turns have  little  or  nothing  in  common.  They  are  dif- 
ferent species.  To  affirm  the  one  is  in  no  sense  to  deny 
the  other. "® 

We  are  brought  to  the  interesting  question.  Did  Carey 
deny  Ricardo's  concept?  We  might  answer  that  he 
had  nothing  to  say  on  a  static  concept  of  returns  rela- 

"  Marshall,   op.   cit.,   165. 


140  THE    RICARDIAN    RENT    THEORY 

tive  to  a  limited  area.  Seemingly  he  misunderstood  what 
it  was  that  Ricardo  taught.  In  the  absence  of  a  specific 
statement,  however,  his  teaching,  as  we  believe,  would 
rather  confirm  than  deny  the  Ricardian  concept.  If  not, 
why  did  he  think  that  population  would  become  too 
dense?  This  was  his  opinion  in  1848  before  he  had 
found  a  check  to  over-population.  Why  did  he  look  for 
the  reHef  of  over-population  in  the  harnessing  of  new 
lands?  Above  all,  the  law  of  substitution  was  a  salient 
feature  of  his  economy.  This  law  was  so  prominent 
that  Dr.  Elder  spoke  of  it  as  a  leading  feature  of  Carey's 
writings. 

In  Ricardian  usage,  land,  labor,  and  capital  were  the 
productive  factors.  The  essence  of  the  problem  con- 
fronting Ricardo  was  the  disproportionality  of  these 
factors.  Land  ("being  fixed")  grew  proportionately 
shorter  with  the  increase  of  labor  and  capital.  This  is 
to  say,  it  showed  diminishing  returns.  Of  course,  re- 
turns are  reckoned  relative  to  the  whole  investment, 
though,  in  Ricardo's  mind,  land  was  the  particular 
source  of  increasing  costs. 

Moreover,  the  problem  confronting  Carey  was  one 
of  disproportionality.  Briefly,  what  were  his  views? 
Population  first  settles  on  the  poor  land.  Capital  and 
labor  increase  until  land  becomes  the  short  factor. 
Meanwhile,  increased  strength  enables  them  to  appropri- 
ate a  more  fertile  tract.  After  a  time,  this  becomes  the 
short  factor,  and  so  on  until  the  most  fertile  tract  is 
reached.  Every  movement  is  based  on  the  principle  of 
diminishing  returns. 

We  conclude  that  the  views  of  these  two  famous  econ- 
omists were  not  opposite  views  of  the  same  thing.  Their 
economics  were  upon  different  bases;  two  different  eco- 
nomics from  two  different  premises  of  fact  and  view- 


HENRY    CHARLES    CAREY  141 

point;  the  one  was  an  outgrowth  of  industrial  and  social 
conditions  in  the  England  of  1817;  the  other  was  an 
outgrowth  of  industrial  and  social  conditions  in  the 
America  of  1848.  "^  Ricardo's  diminishing  returns  and 
Carey's  land-supply  concept  are  both  essential  to  a  true 
law  of  diminishing  returns. 

The  reason  for  the  common  opinion  that  Carey  denied 
diminishing  returns  in  the  Ricardian  sense  is,  I  believe, 
that  critics  have  made  the  common  shift  from  static 
conditions  on  a  limited,  specific  area  to  dynamic  condi- 
tions covering  the  whole  industry  over  a  long  period  of 
time.  Taking  the  latter,  which  is  an  entirely  different 
problem,  Carey  was  right.  Looking  either  backward  or 
forward,  to  the  past  or  to  the  future,  the  whole  industry, 
in  the  historical  sense,  shows  increasing  returns.  Other 
reasons  are  that  only  effective  utilities  compose  the  land- 
supply  or  the  supply  of  any  factor.  These  compose  the 
force,  the  available  power  to  perform  the  functions  of 
productive  factors.  Proportionality  is  worked  out  upon 
this  principle,  but  in  all  adjustments  tending  toward  pro- 
portionality, the  law  of  substitution  is  assumed ;  it  is  the 
means  to  that  end.  This  law,  in  turn,  is  generally  based 
on  diminishing  returns.  Therefore,  having  shown  at 
length,  that  Carey's  contention  was  for  substitution  for 
the  short  factor,  land,  we  have  shown  that,  in  reality,  he 
confirms  diminishing  returns,  though  he  nowhere  specifi- 
cally mentions  that  law  in  the  sense  that  Ricardo  used  it. 

It  would  be  merely  repetition  to  present  the  argu- 
ment of  those  who  frankly  acknowledge  Carey  as  their 
master  and  whose  writings  are  no  more  than  expositions 
of  Carey's  system  in  the  form  of  text-books. 

E.  Peshine  Smith  was  a  devoted  disciple  whose  Man- 
ual of  Political  Economy   (Philadelphia,   1853)    is  only 

'^  Gide   and  Rist,   Histoire  des  Doctrines  Economiques,  388-389. 


142  THE    RICARDIAN    RENT    THEORY 

an  exposition  of  Carey's  thought  in  small  compass. 
Other  followers  of  Carey,  although  they  do  not  fall 
within  the  compass  of  this  study  in  that  they  did  not 
write  on  rent,  are  Charles  Nordhoff,  Horace  Greeley, 
Ralph  Waldo  Emerson,  Stephen  Colwell,  and  William 
Elder. 

Robert  Ellis  Thompson's  Social  Science  and  National 
Economy  (Philadelphia,  1875)  is  worthy  of  special  men- 
tion, not  because  he  added  anything  to  Carey's  thought, 
but  because  of  the  wealth  of  historical  evidence  which 
he  marshalled  in  support  of  Carey's  views. 

Professor  W.  D.  Wilson,  a  follower  of  Carey,  teaches 
that  cultivation  begins  "on  the  hillsides,  or  hill  tops, 
where  the  woods  are  easily  cleared,  and  where  they 
are  free  from  the  dampness  and  malaria  of  the  lower 
but  more  productive  soils."  ^°  He  teaches  that  the  value 
of  land  is  equal  to  the  cost  of  its  reproduction.  ^^  He 
classifies  land  as  capital.  ^-  Likewise  on  capital,  wealth, 
and  the  law  of  diminishing  returns,  he  is  in  essential 
agreement  with  Carey,  although  he  was  less  optimistic.  ^^ 
The  next  chapter  will  be  devoted  to  Francis  Bowen, 
who  like  Carey  was  a  national  economist  and  gifted 
writer. 

8"  Wilson,  W.  D.,  Political  Economy,  92. 
81  lb.,  92,  93. 

82/&.,    110. 

^Ib.,   308-321. 


CHAPTER   VII 
FRANCIS    BOWEN 

FRANCIS  BOWENi  (1811-1890)  was  born  at 
Charlestown  and  died  at  Cambridge,  Massachu- 
setts. He  was  a  pupil  in  the  common  schools 
of  Boston,  attended  Phillips  Exeter  Academy,  and  was 
graduated,  the  first  scholar  in  his  class,  at  Harvard  in 
1833.  Immediately  after  his  graduation,  he  became  a 
tutor  in  Greek,  and,  soon  afterwards,  wrote  the  lives 
of  some  prominent  statesmen  for  Spark's  Library  of 
American  Biography.  Resigning  at  Harvard  in  1839, 
he  spent  two  years  in  travel  and  study  in  Europe.  While 
abroad,  he  met  Sismondi  and  other  notable  scholars.  He 
returned  to  Cambridge  in  1840,  and  spent  the  following 
twelve  years  in  literary  pursuits.  He  was  editor  and 
proprietor  of  The  North  American  Review  for  eleven 
years  (1843-1854)  ;  and,  in  addition,  he  edited  The  Amer- 
ican Almanac  and  Repository  of  Useful  Knowledge. 

^References:  (1)  yational  Encyc.  Amer.  Bing.,  XI,  452.  (2)  Encyc. 
Britannica,  11th  ed.,  IV,  342.  (3)  Encyc.  Americana,  III.  (4)  Pal- 
grave,  Diet.  Pol.  Econ.    (by  F.   W.  Taussig),  I,   175. 

Professor  Bowen  was  the  author  of  a  large  number  of  books  on  a 
variety  of  subjects.  He  wrote  on  historj-,  politics,  education,  political 
polity,    philosophy,    metaphysics,    literature,    and    religion. 

Luigi  Cossa  {An  Introdu-ction  to  the  Study  of  Pol.  Econ.,  London, 
1893)  said:  "In  more  recent  years  the  late  Professor  Bowen  of  Harvard 
College  proved  himself  the  ablest  member  of  this  school  [The  National 
and  Cosmopolitan  School],  and  wrote  a  treatise  which  defended  the 
'banking  principe'  and  rejected  the  wage-fund  as  well  as  the  theory 
of  rent.  He  further  denied  the  practical  value  of  Malthus'  views  for 
America,  where  the  farmer  owned  his  own  land  and  every  workman  was 
a  capitalist."  Professor  Taussig  said:  "His  economic  •«Titings  in  the 
main  are  in  the  nature  of  text-books,  stating  and  illustrating  the  doc- 
trines of  the  classical  economists.  But  on  the  subject  of  international 
trade  he  diverged,  and  reasoned  in  favor  of  the  doctrine  of  protection. 
He  laid  stress  on  the  need  of  national  independence,  and  of  aiding 
young  industries;  and  he  made  application  also  of  Mill's  reasoning  as 
to  the  possible  effects  of  duties  on  the  play  of  international  demSnd 
(Palgrave's    Dictionary,    1894   ed.,    175). 


144  '^^^    RICARDIAN    RENT    THEORY 

He  delivered  two  courses  of  lectures  on  metaphysical 
and  ethical  sciences  during  the  years  1848-9  at  Lowell 
Institute.  In  1850,  he  was  elected  professor  of  history 
at  Harvard.  But  he  had  taken  the  unpopular  side  on 
the  Hungarian  question  in  his  articles  contributed  to 
The  North  American  Review;  and  as,  for  this  reason, 
the  Board  of  Overseers  failed  to  concur  with  the  cor- 
poration, he  retained  his  position  only  six  months.  Three 
years  later,  however,  he  was  elected  Alford  Professor 
of  Natural  Religion,  Moral  Philosophy,  and  Civil  Polity, 
a  position  which  he  retained  to  within  a  few  months  of 
his  death. 

He  was  profoundly  religious,  a  staunch  defender  of 
the  Bible,  and  an  opponent  of  Darwinism.  His  religious 
convictions  so  pervaded  his  thought  that  a  strong  theo- 
logical element  is  made  the  basis  of  his  system  of  eco- 
nomic science.  A  deep  devotion  to  religion  colored  his 
every  principle  and  thought. 

The  decade  previous  to  the  Civil  War  was  not  pro- 
lific of  works  on  economics.  The  stimulus  afforded  to 
our  economists  by  English  publicists  ceased  to  be  active 
after  Mill's  publication  in  1848.  A  furious  tariff  strug- 
gle at  an  earlier  date  was  the  direct  cause  of  numerous 
works  on  political  economy,  but  this  issue  had  been  set- 
tled for  two  decades.  Currency  and  banking  had  ceased 
to  be  paramount  issues.  The  great  sectional  question  so 
engaged  the  attention  of  the  public  that  considerations 
primarily  economic  were  reduced  to  a  subordinate  rank. 

It  was  in  this  period  (1856)  that  Bowen's  book  ap- 
peared. Professor  Dunbar  tells  us,  however,  that  the 
book  was  compiled  by  the  author's  throwing  "into  con- 
nected form  a  long  series  of  articles  and  lectures  pro- 
duced by  him  in  the  preceding  ten  years."  -     Recasting 

^  Dnnbar,  Essays,  12. 


FRANCIS   BOWEN  145 

familiar  materials,  the  author  succeeded  in  adding  a 
freshness  to  the  old  topics  by  a  discussion  often  vigor- 
ous and  full  of  emotion.  Bowen  had  unbounded  faith 
in  his  country ;  his  book  produces  on  the  mind  an  impres- 
sion like  that  which  the  young  America  it  describes 
makes  upon  the  imagination.  It  overflows  with  hope- 
ful energy,  like  that  which  brings  encouragement  to  the 
unsuccessful  worker  in  the  crowded  places  of  the  Old 
World,  when  he  thinks  of  a  new  country  to  which  he 
may  carry  his  willing  hands  and  his  ambitious  hopes. 

Our  author  was  a  national  economist;  he  entitled  his 
work  American  Political  Economy.  His  method  of  rea- 
soning and  the  character  of  his  economic  studies  made 
descriptive  writers  like  Samuel  Laing  particularly  inter- 
esting to  him.  His  own  work  so  abounds  in  the  descrip- 
tion of  conditions  that  he  loses  sight  of  fundamentals. 
He  fails  to  see  the  woods  because  of  the  trees.  It  can- 
not be  said  that  in  his  whole  discussion  on  rent,  he 
either  tells  what  the  rent-thing  is  or  gives  any  positive 
theory  to  account  for  its  origin,  its  increase,  or  its  dim- 
inution. Though  defining  political  economy  as  a  science, 
he  proceeds  to  treat  it  as  an  art.  His  splendid  com- 
mand of  English  together  with  his  habit  of  introducing 
profound  questions  tends  to  make  his  work  charlatanic, 
wheedling,  sentimental,  and,  at  times,  deceptive  through 
a  skillful  use  of  fair  words. 

The  title,  American  Political  Economy,^  deserves 
comment.  In  the  preface  to  this  work,  he  says,  "The 
title  under  which  the  book  now  appears  may  seem  to 
require  defense  or  explanation.  I  hold,  with  Mr.  Samuel 
Laing,  that  'every  country  has  a  Political  Economy  of 

*The  title  of  his  edition  of  1856  was,  The  Principles  of  Political  Econ- 
omy applied  to  the  condition,  the  resources,  and  the  institutions  of  the 
American  People,  the  edition  of  1870  was  titled,  American  Political  Econ- 
omy, etc. 


146  THE    RICARDIAN    RENT    THEORY 

its  own,  suitable  to  its  own  physical  circumstances  of 
position  on  the  globe,'  and  to  the  character,  habits,  and 
institutions  of  its  people."  * 

He  admits  that  certain  economic  principles  are  gen- 
eral, and  applicable  to  "all  nations  under  the  sun." 
"But,"  says  he,  "it  must  be  admitted,  I  think,  that  these 
universal  principles  are  comparatively  few  and  unim- 
portant, and  if  the  science  were  limited  to  them,  it  would 
be  of  narrow  compass  and  limited  utility."  ^ 

Professor  Bowen  believes  that  the  science  must  be 
treated  inductively,  and  that,  although  Ricardo,  J.  S. 
Mill,  and  their  followers  professed  to  treat  the  subject 
deductively  and  in  the  abstract,  so  that  their  conclu- 
sions could  be  universally  applicable,  yet  "The  system 
which  they  expounded  is  really  the  Political  Economy 
of  England  alone,  and  is  even  more  characteristic  and 
peculiar  than  her  social  organization  and  civil  polity."  * 
He  claimed  with  truth  that  English  circumstances  and 
problems  received  undue  attention  as  compared  with 
other  problems  of  equal  importance  in  a  well  rounded 
system  of  distribution. 

Bowen's  starting  point,  or  first  assumption,  is  that  a 
certain  thing  is  desirable,  that  this  is  a  good  or  that  is 
an  evil.  His  problem  was  to  acquire  the  good  and  to 
avoid  the  evil.  He  would  use  economics  as  a  portion 
of  that  art  of  statesmanship.  Bowen  insists  upon  the 
utility  of  laissez  faire  and  of  the  natural  order,  yet  he 
makes  a  plea  for  governmental  restraint  both  internal 
and  external.  He  is  anxious  to  preserve  "the  benevolent 
purpose  of  the  Designer"  which  turns  the  course  of 
the  self-chosen  effort  of  individuals  toward  the  common 
defense  and  the  general  prosperity  of  all.     He  tells  us 

*  Bowen,  American  Political  Economy    (2d  ed.),  iii. 
»/&.,  iv.      «ib.,  V. 


FRANCIS   BOWEN  147 

that  the  attempts  of  legislators  to  turn  the  industry  of 
society  in  one  direction  or  another,  out  of  its  natural 
and  self-chosen  channels  are  almost  invariably  product- 
ive of  harm.  Yet  the  leading  characteristic  of  his  entire 
work  is  an  elaborate  defense  of  protection. 

Under  his  treatment,  laissez  faire  acquires  a  somewhat 
ludicrous  sense.  The  laissez  faire  that  Bowen  conceived 
would  not  ask  the  government  to  keep  its  hands  off  of 
industries;  rather  it  would  preserve  precious  liberty  to 
the  individual  by  tying  the  hands  and  feet  of  everybody 
else,  lest  he  should  be  interfered  with. ''  Bowen  thinks 
the  benevolent  purpose  of  the  Designer  is  to  cause  the 
acts  of  those  who  are  thinking  only  of  their  own  credit 
and  advantage  to  benefit  others.  ^ 

"We  are  all  servants  of  one  another  without  wishing 
it,  and  even  without  knowing  it;  we  are  all  cooperating 
with  each  other  as  busily  and  effectively  as  the  bees  in 
a  hive,  and  most  of  us  with  as  little  perception  as  the 
bees  have,  that  each  individual  effort  is  essential  to  the 
common  defense  and  general  prosperity.  ^ 

Bowen  advocated  limitations  of  the  laissez  faire  doc- 
trine. Legislative  prohibition  of  vice  and  crime  only 
remove  stumbling  blocks  that  obstruct  the  working  of 
the  natural  laws.  "To  remove  such  stumbling  blocks, 
then,  is  not  to  create,  but  to  prevent,  interference  with 
the  natural  order  of  things.  Legislation  directed  to  this 
end  is  only  a  legitimate  carrying  out  of  the  laissez  faire 
principle."  ^°  He  extends  this  principle  until  it  encom- 
passes the  prevention   of   external    dangers    and    hind- 

1  North  American  Review,  (July,  1870),  III,  246.  Bowen,  Political 
Economy,  ed.  1856,  20,  23,  27.  Bowen,  AmeHcan  Political  Economy, 
18-22. 

"Bowen,   Politieal  Economy    (1856),   20. 

»/&.,  27. 

i»/&.,  23-24. 


148  THE    RICARDIAN    RENT    THEORY 

ranees,  and  allows  for  retaliatory  legislation  as  between 
nations.  " 

In  his  estimation,  differences  in  the  economy  of  na- 
tions make  necessary  certain  restrictive  legislation  in 
order  that  the  people  of  a  nation  may  thus  procure 
larger  liberty  than  they  would  otherwise  enjoy.  Our 
author's  conception  of  the  principle  of  hisses  faire 
makes  this  doctrine  a  basis,  or  rather  a  demand,  for  a 
protective  tariff. 

Bowen's  opinions  on  value  and  wealth  are  very  unlike 
those  of  the  English  economists.  Because  these  opinions 
are  preparatory  to  the  rent  problem,  I  shall  now  review 
them.  His  reasoning  on  value  is  strictly  limited  to  the 
concept  of  exchangeable  value.  ^-  Exchangeability  de- 
pends on  the  utility  of  a  commodity  together  with  its 
difhculty  of  attainment.  ^^  Then,  too,  he  says,  the  value 
of  a  machine  may  be  either  the  labor  which  it  saves, 
or  the  labor  which  it  costs.  Thus,  in  his  discussion  of 
value,  at  least  three  unlike  concepts  appear. 

His  definition  of  wealth  is  broad  enough  to  include 
those  agencies,  material  or  immaterial,  which  render 
gratification  to  our  desires.     He  says : 

Many  Political  Economists  exclude  immaterial  products  from 
their  definition  of  wealth  because  the  labor  which  is  dev^oted 
to  such  products  ends  in  immediate  enjoyment,  without  any 
increase  of  the  accumulated  stock  of  permanent  means  of  en- 
jojonent.  "When  a  tailor  makes  a  coat  and  sells  it,"  argues 
J.  S.  Mill,  "there  is  a  transfer  of  the  price  from  the  customer 
to  the  tailor,  and  a  coat  besides,  which  did  not  previously 
exist ;  but  what  is  gained  by  an  actor  is  a  mere  transfer  from 
the  spectator's  funds  to  his,  leaving  no  article  of  wealth  for 
the  spectator's  indemnification."  We  reply,  that  the  purchaser 
obtains  only  a  gratification  of  desire  in  either  case.  From  the 
coat,  he  has  moderate  enjoyment  prolonged  for  some  months; 
but  he  might  do  without  it,  and  work  in  his  shirt-sleeves.    From 

"/&.,  25. 

^  Bowen,   Antfrican  Political  Econoviy,   33. 

^  Bowen,  Political  Economy,  32. 


FRANCIS   BOWEN 


149 


the  theatre  he  has  keen  enjoyment  that  lasts  only  a  few  hours; 
and  he  may  prefer  such  pleasure  to  the  luxury  of  additional 
clothing.  It  is  inconsistent  to  give  the  name  of  wealth  to 
what  pleases  our  palates  for  a  moment,  and  deny  it  to  what 
gives  keener  pleasure  to  our  ears.  The  characteristic  of  all 
wealth  is,  directly  or  indirectly,  to  satisfy  some  want,  or  gratify 
some  desire.  Food  which  is  ready  to  be  eaten  is  wealth,  just 
as  much  as  the  knives  and  forks  with  which  we  eat  it ;  though 
the  former  is  devoured  at  once,  and  there  is  an  end  of  it,  while 
the  latter  may  remain  in  daily  use  for  years.  ^* 

This  reasoning  attaches  the  concept  of  wealth  to 
usance  rather  than  to  productive  agents  themselves.  In 
fact,  his  whole  thought  seems  to  center  on  returns  rather 
than  upon  the  nature  of  the  agency  giving  origin  to 
returns.  Consequently  personal  services,  the  produce 
of  capital  agencies,  and  the  produce  of  the  land  would 
be  treated  by  the  same  law.  Then,  as  we  shall  see,  he 
finds  profits  and  rent  to  be  one  and  the  same  thing.  His 
distinction  between  them  is  only  in  name. 

"Malthus  on  population  and  Ricardo  on  rent  are  the 
great  dragons  against  which  he  feels  bound  to  do  vigor- 
ous battle."  ^^  True  to  his  environment  he  claims  that 
"down  to  the  present  day,  the  only  evil  which  has  been 
felt  has  been,  not  an  excess,  but  a  deficiency,  of  popula- 
tion." ^*  He  dwells  upon  the  ambiguity  of  the  word 
"tendency"  in  the  discussion  of  Malthus,  and  paints 
a  most  horrible  picture  of  the  consequences  of  that 
author's  reasoning.  " 

After  stating  the  Malthusian  doctrine  and  pointing 
out  its  consequences,  he,  taking  the  theological  point  of 
view,  says:  "I  hope  to  prove  satisfactorily,  that  the 
doctrine  itself  is  a  mere  hypothetical  speculation,  hav- 
ing no  relation  to  the  times  in  which  we  live,  or  to  any 

"  Bowen,  American  Political  Economy,  1-2,  note. 
'^  North  American  Review,  July,   1870,   III,   246. 
"  Bowen,  Political  Economy,  137. 
"/b.,  139-140. 


I50 


THE    RICARDIAN    RENT    THEORY 


which  are  near  at  hand.  In  those  facts  which  appear  so 
alarming  to  the  Malthusians,  I  see  only  indications  of 
a  beneficent  arrangement  of  Providence,  by  which  it  is 
ordained  that  the  barbarous  races  which  now  tenant  the 
earth  should  waste  away  and  finally  disappear,  while 
civilized  men  are  not  only  to  multiply,  but  to  spread,  till 
the  farthest  corners  of  the  earth  shall  be  given  to  them 
for  a  habitation."  ^^ 

Taking  the  dynamical  concept  of  returns,  he  claims 
that  if  population  increases  even  in  a  geometrical  ratio 
no  scarcity  would  be  produced  for  centuries.  "The  great 
and  palpable  error  of  the  Malthusians  consists,"  he  de- 
clares, "in  assuming,  without  a  particle  of  evidence,  nay, 
when  all  the  evidence  tends  to  the  contrary,  that  the 
time  has  already  come,  that  population  has  reached  its 
limits,  that  there  is  even  now  a  deficiency  of  food  so 
that  the  only  present  mode  of  increasing  the  happiness 
of  the  lower  classes  is  to  lessen  their  numbers." 

He  claims  that  Malthusianism  is,  in  its  simplest  form, 
only  an  expression  of  a  law  that  belongs  both  to  the 
vegetable  and  animal  kingdoms.  He  admits  the  truth 
of  its  tendency,  yet  claims  that  it  has  no  applicability 
to  the  present  state  of  afifairs.  He  thinks  that  the  appli- 
cation of  this  doctrine  to  the  afifairs  of  man  is  as  remote 
as  the  loss  by  the  sun  of  its  heat.  But  if  a  person  begin 
to  economize  oil,  candles,  and  fuel,  for  that  remote  day, 
"his  friends  would  reasonably  be  alarmed  for  his  sanity, 
and  would  urge  him  to  retire  for  a  while  to  a  mad- 
house." ^® 

He  shows  that  the  population  of  Belgium  (1846)  was 
344  persons  to  the  square  mile.  They  lived  in  comfort. 
From  this  example,  he  concluJes  that  the  time  is  beyond 

«/&.,   141. 
■^  lb..   141-2. 


FRANCIS   BOWEN  151 

our  imagination  when  the  entire  earth  will  be  as  densely 
populated  as  that  country.  -°  He  uses  the  argument  so 
frequently  advanced  by  his  American  predecessors,  that, 
while  there  will  be  more  work  to  do  with  the  increase 
of  numbers,  yet  there  will  be  more  hands  to  do  it.  At 
this  point,  he  admits  diminishing  returns  in  the  historical 
sense,  but  considers  the  principle  of  no  particular  sig- 
nificance. '^  He  thinks  that  it  is  a  faulty  distribution 
rather  than  the  niggardliness  of  nature  which  causes 
poverty.  --  On  this  point,  his  views  are  precisely  the 
same  as  those  of  Daniel  Raymond. 

Erroneously,  I  think,  he  claims  that  a  disproof  of 
Malthusianism  is  found  in  the  fact  that  nations,  espe- 
cially barbarous  and  half -civilized  nations,  have,  in  his- 
tory, diminished  in  numbers  as  a  result  of  war,  famine, 
disease,  vice,  and  ignorance,  but  that  their  diminution 
has  not  been  occasioned  by  the  niggardliness  of  nature. 
He  says,  "The  wasting  away  of  such  tribes  may  be,  in 
some  cases,  the  consequence  of  a  deficiency  of  food ;  but 
it  is  certainly  not  the  result  of  over-population ;  for  the 
civilized  men  who  come  to  occupy  their  places,  obtain 
from  the  same  soil  abundance  of  food  for  a  population 
larger  than  theirs  by  twenty  or  a  hundred  fold."  '^  He 
cites  the  case  of  the  North  American  Indians  as  an 
illustration.  Malthus  certainly  would  have  agreed  with 
this  statement,  for  in  his  contention  that  population  does 
press  and  has  actually  pressed  upon  the  means  of  sub- 
sistence, his  view  was  static  rather  than  dynamic.  He 
considered  conditions  at  the  time  being.  What  are  the 
facts  under  the  existing  circumstances,  not  what  would 
they  be  under  more  advanced  and  different  circum- 
stances, was  the  problem  in  the  Essay  of  Malthus. 

«>Ih.,  142-44.       ^Ih.,  144-45.      ^  lb.,  145. 
»/&.,   145-6;    quotation    from    146. 


152 


THE    RICARDIAN    RENT    THEORY 


Bowen  then  advances  the  argument  previously  urged 
by  A.  H.  Everett,  namely,  that  with  money  I  "can  pur- 
chase food  of  my  neighbor,  that  I  can  even  lay  the  fer- 
tility of  both  Indies  and  of  the  farthest  corners  of  the 
earth  under  contribution  to  supply  my  personal  wants. 
Communities  and  nations  act,  in  this  respect,  just  like 
individuals."  In  other  words,  his  thought  is  that  a 
nation  is  not  fed  necessarily  by  the  products  of  its  own 
soil,  but  that,  through  exchange,  any  people  may  com- 
mand the  products  of  any  part  of  the  world.  There- 
fore, if  diminishing  returns  in  agriculture  so  act  in  a 
particular  section  of  the  world  as  to  limit  the  necessities 
in  that  locality,  the  people  there  will  turn  to  other  indus- 
tries and  will  depend  on  other  sections  of  the  world  for 
their  necessities.  He,  like  Everett,  thought  such  an  argu- 
ment would  defeat  the  evil  consequences  of  diminishing 
returns.  -* 

Such  an  argument,  it  should  be  noted,  does  not  over- 
come the  consequences  of  diminishing  returns,  but 
merely  shows  how  its  immediate  effects  may  be  averted. 
As  we  have  seen.  Cooper's  reply  to  Everett's  statement 
on  this  point  seemed  conclusive. 

This  fact  of  the  people's  drawing  their  support  from 
all  parts  of  the  earth  is  cited  by  Bowen  as  one  of  "the 
two  great  facts  which  afford  a  complete  refutation  of 
Malthusianism."  -^  The  second  "great  fact"  which,  he 
claims,  affords  "complete  refutation  to  Malthus,"  is  "that 
the  practical  or  actual  limit  to  the  growth  of  population 
in  every  case  is  the  limit  to  the  increase  and  distribu- 
tion, not  of  food,  but  of  wealth."  -®  This  is  to  say  that 
there  is,  and  will  be,  a  bountiful  sufficiency  of  necessi- 
ties  for  an   augmenting  population,   and  that   the   real 

^  lb.,   146-7;    quotation  from   146. 
^  lb.,   148. 
^Ib.,  148. 


FRANCIS   BOWEN  153 

problem  lies  in  the  securing  of  such  a  distribution  of 
purchasing  power  as  will  enable  the  supply  of  necessities 
to  be  adequately  utilized  by  all  men. 

These  two  arguments  are  corollaries  in  that  the  one 
must  accompany  the  other,  in  order  to  refute  the  sup- 
posed dictum  of  Malthus  that  population  is  limited  by 
the  productivity  of  the  soil  it  occupies.  Through  a 
faulty  distribution,  he  accounts  for  the  famine  of  1847 
in  the  British  Isles.  At  any  one  time,  there  is  no  gen- 
eral famine  the  world  over;  want  in  one  section  of 
the  world  may  be  supplied  by  other  sections;  therefore, 
if  the  distribution  of  wealth,  or  purchasing  power,  be 
adequate,  famine  would  be  an  impossibility.  "In  1847, 
the  bounty  of  Providence  to  the  British  Isles  did  not 
fail;  shiploads  of  corn  were  turned  away  from  their 
shores  for  want  of  a  market.  The  granaries  of  two 
Islands  were  filled  to  overflowing,  not  indeed  from  the 
products  of  their  own  harvests,  but  from  the  immense 
supplies  poured  into  them  by  our  ever-teeming  land. 
.  The  fate  of  the  Irish  and  Scotch  appeared 
the  more  terrible,  because  they  starved  in  the  midst  of 
plenty."  -'' 

Professor  Bowen  accuses  Malthus  of  a  fallacy  of 
inversion.  In  reply  to  the  contention  of  Malthus  that 
population  grows  in  response  to  an  increase  of  sub- 
sistence, our  author  says :  "More  grain  is  raised  because 
there  are  more  men  who  need  it,  and  not  more  men 
are  raised  because  there  is  more  grain  to  feed  them 
with.  Procreation  is  not  stopped  because  there  is  no 
more  grain,  since  misery  and  peril  of  starvation  only 
make  men  reckless,  and  cause  them  to  multiply  faster. 
But  agriculture  is  stopped  when  there  are  no  more 
mouths  calling  for  food ;  a  cessation  of  demand  causes 

2^/6.,   149-150,   quotation   from   150. 


154 


THE    RICARDIAN    RENT    THEORY 


a  cessation  of  supply  here,  because  the  husbandman  is 
looking  only  for  pecuniary  gain."  -^  "It  is  not  the  excess 
of  population  which  causes  the  misery,  but  the  misery 
which  causes  the  excess  of  population."  -^ 

Whatever  affects  most  strongly  the  inclination  to  labor 
and  to  save,  and  thus  furnishes  the  stimulus  for  the 
accumulation  of  capital,  also  regulates  in  a  great  degree 
the  increase  of  population.  Awakened  ambition  for  the 
attainment  of  riches  or  for  the  advancement  in  society 
cause  prudence  in  one's  expenditures,  and  check  one's 
contracting  any  relations  that  may  become  a  burden  to 
his  advancement.  In  a  normal  state,  the  inclination  of 
the  people  to  marriage  is  governed  by  their  opinion  of 
the  effect  which  marriage  will  have  upon  their  position 
in  life.  ^°  "In  a  newly  settled  region,  children  are  a 
help  to  the  parents'  advancement,  because  labor  is  so 
valuable;  hence  the  rapid  advance  of  population  in  the 
frontier  states  of  our  own  Union."  ^^  He  argues  that 
children  are  not  as  advantageous  to  parents  in  case  of 
a  dense  population.  In  this,  he  is  in  harmony  with  the 
thesis  of  George  Tucker,  namely,  that  the  birth  rate 
diminishes  as  the  density  of  population  increases.  ^^ 

His  views  may  be  summarized  as  follows : 

(a)  An  increased  population  is  desirable  in  order 
better  to  utilize  the  world's  natural  resources. 

(b)  By  a  beneficent  arrangement  of  Providence,  the 
barbarians  shall  waste  away,  and  civilized  peoples  shall 
occupy  the  farthest  corners  of  the  earth. 

(c)  Necessities  will  increase  faster  than  a  civilized 
population. 

(d)  There  are  historical  diminishing  returns,  but  their 

^  lb.,   150-1. 
^  lb.,  152. 
30  lb.,  155-6. 
31 /b.,   157. 
^Ib.,   160. 


FRANCIS   BOWEN  155 

evil  consequences  are  so  remote  as  to  make  them  un- 
worthy of  consideraticm. 

(e)  Poverty  is  due,  not  to  the  niggardliness  of  na- 
ture, but  to  a  faulty  distribution. 

(f)  Population  does  not  depend  on  the  land  which 
it  occupies  for  subsistence,  but  draws  from  every  corner 
of  the  earth. 

(g)  Population  is  the  cause  of  abundance  rather  than 
of  scarcity. 

(h)  The  growth  of  population  will  be  limited  more 
and  more  by  the  negative  check  as  civilization  advances. 

(i)  In  sparsely  settled  regions,  children  are  an  aid 
to  their  parents ;  but,  with  the  increase  of  numbers,  the 
birth  rate  will  decline. 

Bowen  regards  the  Malthusian  theory  and  the  Ricar- 
dian  theory  as  phases  of  the  same  problem.  Therefore 
much  that  has  been  said  on  the  population-problem  ap- 
plies with  equal  force  to  the  rent-problem.  To  the  pop- 
ulation-problem, rent  is  a  supplement  which  "comes  in 
to  fill  up  the  deficiency  in  our  heritage  of  woe."  He  saw 
clearly  that  the  rent  and  population  theories  grew  out 
of  the  peculiar  social  conditions  of  England,  where  a 
small  class  owns  the  land.  Feudal  relations  have  dis- 
appeared there,  but  the  magnitude  of  feudal  estates  is 
not  diminished.  English  noblemen  have  turned  their  vast 
estates  into  deer-parks  and  the  rural  tenantry  has  been 
driven  into  the  manufacturing  districts.  Land-monopoly, 
high  rents,  and  burdensome  taxes  are  characteristic  of 
the  conditions  in  England. 

Bowen  claims  that  Ricardo's  theory  contains  few  gen- 
eral truths,  and  is  inapplicable  in  other  countries.  Eng- 
land alone  has  a  laboring  class  entirely  dependent  on 
wages.  Ricardo's  theory  was  invented  to  suit  these  con- 
ditions.    American  conditions  are  the  reverse  of  those 


156  THE    RICARDIAN    RENT    THEORY 

in  England.  An  increase  of  population  in  this  country 
means  increasing  rather  than  diminishing  returns,  and 
a  lower  rather  than  a  higher  price  for  food  and  neces- 
sities. 

Bowen  claims  that  Ricardo's  main  basis  of  rent,  "the 
original  and  inherent  powers  of  the  soil,"  is  no  basis 
for  a  theory  of  rent;  that  these  powers  may  readily 
be  produced  by  labor,  and  will  be  if  the  location  justi- 
fies the  expenditure  for  such  creation.  He  also  mini- 
mizes Ricardo's  other  basis  of  rent,  that  of  location. 
Bowen  seems  to  think  that  location  also  is  artificial.  Loca- 
tion is  nearness  to  population  and  is  created  or  destroyed 
with  the  movement  of  population  from  place  to  place. 
From  this  reasoning,  he  reaches  the  conclusion  that, 
"Rent  depends,  not  on  the  increase,  but  on  the  distribu- 
tion, of  the  population.  It  arises  from  the  excess  of 
the  local  demand  over  the  local  supply."  Rent  is  deter- 
mined either  by  the  expense  of  bringing  the  food  from 
a  distance  to  the  population  or  by  the  expense  and  incon- 
venience of  the  population  going  to  the  food. 

Although  this  reasoning  accounts  for  both  the  quali- 
ties of  land  and  the  location  of  land  as  matters  of  human 
production,  yet  it  implies  an  admission  of  the  law  of 
diminishing  returns  and  proportionality.  The  need  of 
transportation  or  of  the  distribution  of  population  over 
the  earth  is  occasioned  only  by  the  fact  that  there  exists 
an  elastic  limit  to  the  productive  powers  of  land  in  any 
one  place.  ^^ 

Bowen  contends  that,  with  a  distribution  of  popula- 

53  This  reasoning  further  suggests  the  narrow  limitations  which  Ri- 
cardo's thought  placed  upon  certain  of  his  so-called  general  suppositions. 
For  instance,  Ricardo  would  have  the  movement  of  labor  from  profession 
to  profession  or  from  place  to  place  to  equalize  wages;  now  why,  by  a 
like  movement  of  population,  would  he  not  have  rents  equalized?  His 
assumptions  respecting  the  movement  of  population  in  the  equalization 
of  wages  were  general ;  his  assumptions  respecting  the  employment  of 
labor  on  different  grades  of  land  were  local  in   their  application. 


FRANCIS   BOWEN  157 

tion  over  the  entire  land,  rent  would  not  exist,  for  there 
would  be  no  scarcity  of  land  relative  to  the  demand  for 
its  products.  But,  he  says,  the  development  of  manu- 
factures requires  a  concentration  of  industries,  so  that 
a  division  of  labor  can  be  worked  out  effectively.  Civil- 
ization depends  upon  a  development  of  all  productive 
forces ;  therefore,  such  a  distribution  of  population  as 
would  do  away  with  rent  cannot  exist.  Rent,  then,  de- 
pends upon  the  centralization  of  productive  forces  and 
the  collection  (not  the  increase)  of  population  into  towns 
and  cities.  Local  rents  depend  upon  local  markets.  From 
this  argument,  he  concludes  that  rents  are  based  entirely 
on  the  territorial  distribution  of  population. 

Ricardo  teaches,  at  times,  that  the  interests  of  the 
landlord  class  are  opposed  to  the  interests  of  the  rest 
of  the  community.  Bowen  thinks  that  a  rise  in  rents 
works  to  the  benefit  of  all  classes.  Farmers  who  pay 
the  rent  are  compensated  by  higher  prices  for  their  pro- 
ducts ;  it  is  the  higher  prices  which  cause  rent.  More- 
over, they  are  compensated  by  the  many  advantages  of 
being  in  the  vicinity  of  a  market.  Manufacturers  pay 
more  for  their  corn  where  rents  are  high ;  but,  because 
of  the  same  conditions  which  produce  rents,  they  find 
a  readier  sale  and  a  higher  price  for  their  products. 
Like  Carey,  Bowen  claims  that,  where  the  manufactur- 
ing town  and  the  farm  are  brought  together,  a  positive 
gain  results  to  the  whole  community  because  of  the 
many  advantages  of  concentrated  industries.  Concen- 
trated industries  make  a  ready  market  for  all  products, 
and  permit  the  best  utilization  of  all  productive  energy. 
Another  "positive  gain  to  the  community  consists  in 
the  saving  of  transportation  both  ways."  Moreover,  like 
Carey,  BoAven  uses  this  reasoning  in  support  of  pro- 
tection. 


158  THE    RICARDIAN    RENT    THEORY 

There  is  but  slight  excuse  for  the  error  of  those  who 
claim  that  Professor  Bowen  denied  the  law  of  diminish- 
ing returns.  His  whole  argument  is  founded  upon  the 
principle  of  this  law  as  applied  to  a  limited  area.  His 
problem  is  how  to  avert  its  evil  consequences  by  a  better 
distribution  of  population. 

The  next  chapter  will  be  devoted  to  John  Bascom 
and  Amasa  Walker:  we  shall  find  that,  although  these 
authors  did  not  follow  closely  in  the  lead  of  Bowen, 
they  were  profoundly  influenced  by  his  writings. 


CHAPTER  VIII 
JOHN  BASCOM  AND  AMASA  WALKER 

WHEN  Bascom  and  Amasa  Walker  wrote,^ 
the  old  problems  which  had  inspired  earlier 
economic  writings  in  America  had  largely 
disappeared.  A  liberal  reform  of  the  tariff  had  long 
since  been  accompHshed;  the  establishment  of  the  sub- 
treasury  was  a  thing  of  the  past ;  and  the  publication  of 
J.  S.  Mill's  Political  Economy  had  seemingly  set  at  rest 
all  economic  differences  by  monopolizing  the  choicest 
thought,  style,  and  method  of  the  science.  Slavery  and 
great  sectional  issues  had  become  paramount  questions. 
This  was  a  period  of  transition  in  which  the  classical 
school  acquired  greater  prestige. 

John  Bascom  (1827-1911)  was  born  at  Geneva,  New 
York.  He  was  the  son  and  grandson  of  clergymen, 
and  a  descendant  on  both  sides  of  old  New  England 
families  among  whom  were  many  men  of  influence  and 
distinction.  At  the  age  of  twenty-two,  he  was  gradu- 
ated at  Williams  College.  Then  he  studied  law  for  a 
year,  attended  Auburn  Theological  Seminary,  tutored 
for  a  time  at  Williams,  and  was  graduated  at  Andover 
Theological  Seminary  in  1855.  During  the  next  nine- 
teen years,  he  taught  English  at  Williams  College.  From 
1874  to  1887,  he  was  President  of  the  University  of 
Wisconsin.  After  leaving  Wisconsin,  he  lectured  on 
sociology  for  a  period  of  four  years  at  Williams.  On 
the  retirement  of  his  life-long  friend.  Professor  A.  L. 

^  Bascom's  economics   appeared   in    1859   and   Walker's  in   1866. 


l6o  THE    RICARDIAN    RENT    THEORY 

Perry,  in  1891,  he  became  Professor  of  Political  Econ- 
omy at  Williams  and  held  the  place  for  ten  years.  In 
1903,  after  forty-eight  years  of  service  as  college  teacher 
and  executive,  he  resigned.  The  remainder  of  his  life 
was  given  to  writing  and  to  public  service.  Between 
1859  and  1901,  he  was  the  author  of  twenty-two  books.^ 

We  have  seen  that  the  training,  experience,  and  in- 
terests of  Bascom  were  in  fields  other  than  economics. 
In  fact,  among  our  earlier  professors  who  taught  eco- 
nomics, it  was  not  considered  necessary  to  acquire  sys- 
temic knowledge  in  this  subject.  ^  His  life  was  devoted 
largely  to  theolog\'  and  philosophy,  and  his  environment 
was  the  classroom  and  the  library  rather  than  the  indus- 
trial world. 

He  defines  economics  as  the  science  which  treats  of 
values.  *  By  "value,"  he  means  purchasing  power ;  con- 
sequently economics  is  the  science  which  treats  of  pur- 
chasing power.  ^  From  this  definition,  logic  would  com- 
pel him  to  emphasize  the  problem  of  distribution,  where- 
as, in  reality,  his  book  contains  a  theory  of  prosperity 
rather  than  a  theory  of  distribution. 

With  some  modifications,  Bascom  would  accept  the 
theory  of  Malthus  on  population.  He  said,  "Malthus 
made  an  important  contribution  to  the  science,  by  a 
more  enlarged  discussion  of  population  and  its  relation 

-His  books  include:  (a)  Political  Economy  (1859);  (b)  Aesthetics 
(1862);  (c)  Philosuphy  of  Rhetoric  (1865);  (d)  Principles  of  Psychology 
(1869)  ;  (e)  Science,  Philosophy,  and  Religion  (1871)  ;  (f)  Philosophy 
and  English  Literature  (1874);  (g)  A  Philosophy  of  Religion  (1876); 
(h)  Comparative  Psychology  (1878);  (i)  Ethics  (1879);  (j)  Natural 
Theology  (1880);  (k)  .Science  of  Mind  (1881);  (1)  The  Words  of 
Christ  (1884);  (m)  Problems  in  Philosophy  (1885);  (n)  Sociology 
(1887);  (o)  The  New  Theology  (1891);  (p)  Historical  Interpretation 
of  Philosophy  (1893);  (q)  Social  Theory  (1895).  See:  A  Memorial  serv- 
ice in  honor  of  John  Bascom  at  the  University  of  Wisconsin,  Madison, 
1911;   Lamb's  Biographical  Dictionary,  I,  217,  Boston,   1900. 

*  Haney,  History  of  Economic  Thought,  515.  See  also  A.  Walker,  The 
Science  of  Wealth,   2d  ed.,  VII. 

*  Bascom,  Social  Theory,  119. 
«/6. 


JOHN    BASCOM  i6i 

to  food;  though  his  statements,  as  is  natural  with  one 
bringing  forward  a  new  principle,  were  one-sided  and 
extreme,  demanding  the  correction  of  later  authors."  * 
His  reasoning  on  population  may  be  briefly  presented 
as  follows : 

(a)  The  human  species  is  capable  of  indefinite  mul- 
tiplication. Labor  has  no  limits  within  itself.  Popula- 
tion tends  to  double  itself  in  twenty-five  years,  as  a 
result  of  the  intrinsic  productive  power  of  man. ' 

(b)  Land  is  limited  in  amount;  from  it  comes  food; 
therefore,  the  population  is  restricted  by  the  limitation 
of  the  earth's  productive  capacity.  Population  is  an 
unhmited  and  immeasurable  force  dealing  with  limited 
and  measurable  quantities.  "Let  the  boundary  be  placed 
where  it  may,  and  such  a  force  will  find  it.  The  capacity 
of  the  globe  is  this  boundary."  * 

(c)  The  limits  of  population  are  always  determined 
by  the  status  quo  of  the  people,  by  their  location,  knowl- 
edge, and  habits.  It  matters  not  that  the  earth  could 
produce  more.  Pressure  is  present  when  the  limit  of 
the  food  supply  under  existing  conditions  is  reached. 

(d)  This  state  of  pressure  is  reached  soonest  where 
civilization  is  at  the  lowest  ebb. 

(e)  This  state  may  be,  and  has  again  and  again  been 
reached  when  the  population  was  sparse. 

(f)  The  universal  tendency  is  for  population  to  out- 
strip the  means  of  subsistence.  ^ 

Bascom  recognizes  the  limiting  forces  of  both  the  pos- 
itive and  negative  checks  to  population.  ^°  He  bases  the 
whole  problem  upon  the  limitations  to  agriculture.  Brief- 
ly, his  reasoning  is  that  population  is  limited  by  capital; 

*  Bascom,  Political  Economy,  17. 
•fib.,  118. 
^  lb.,  119. 
9/6.,  121-122. 
^"Ib.,  125,  126. 


l62  THE    RICARDIAN    RENT    THEORY 

but  capital  is  limited  by  agriculture;  therefore  popula- 
tion is  limited  by  agriculture.  " 

Regarding  rent  Bascom  tells  us  that,  "It  is  the  de- 
ductive force  of  the  law,  not  its  historic  force,  that  im- 
presses the  mind."  ^-  "It  has  been  the  rare  exception, 
taking  human  history  collectively,  that  the  law  of 
Ricardo  has  been  found  governing  the  values  of  land."  ^^ 
This  law  has  been  a  most  complex  social  problem,  "not 
because  of  any  complexity  in  the  law,  but  because  of  its 
ineffectiveness."  ^* 

He  teaches  that  rent  is  the  product  of  natural  agents, 
which  are  of  two  classes :  those  productive  of  material, 
and  those  productive  of  power.  Land  is  the  chief  agent 
of  the  first  class.  He  says  that  the  value  of  land  as  a 
productive  power  depends  on  two  things:  its  fertility 
and  its  location.  The  latter  is  more  important  in  deter- 
mining the  value  of  land.  Distance  and  difficulty  of 
approach  may  overcome  the  advantage  of  greatest  fer- 
tility. Land  serves  two  purposes :  positions  for  buildings 
and  arable  surfaces.  The  former  use  gives  value  to  only 
a  small  portion  of  the  earth,  while  the  latter  use  gives 
value  to  a  large  portion  of  the  earth's  surface.  In  this 
latter  use,  however,  both  location  and  fertiUty  are  com- 
bined. ^^ 

Our  author  approaches  the  problem  of  rent  from  the 
side  of  price  rather  than  of  the  marginal  land  under 
cultivation.  He  says,  "Rent  and  the  cultivation  of  the 
poorest  grade  of  soil  are  both  effects  of  the  same  cause, 
the  rise  of  value  in  produce."  ^®  Taking  the  postulate 
that  there  is  but  one  price  for  produce  in  the  same  mar- 

"/b.,  127. 

■•-  Bascom,  Social  Theory,  123. 

■'^  lb. 

"/6.,   1. 

1^  Bascom,   Political   Economy,   35-36. 

"Bascom,  Social  Theory,  121. 


JOHN    BASCOM  163 

ket,  he  says  that  the  differential  advantage  accruing  to 
the  landlord  who  holds  superior  grades  of  land  (superior 
in  both  location  and  fertility)  is  known  as  rent.  He 
says,  "Difference  of  opportunity  is  the  sole  basis  of 
rent;  he  who  is  in  possession  of  the  higher  opportunity 
demands  for  it  a  recompense.  This  difference  arises 
both  from  the  limited  amount  of  original  gifts  and  from 
the  variety  in  their  intrinsic  worth,  in  their  fertility  and 
position.  This  elasticity  of  tillage,  by  which  it  gives 
way,  but  with  increasing  difficulty,  before  advancing 
population,  is  the  brake  by  which  the  motion  of  the  train 
is  regulated,  is  the  rubber  bed  by  which  its  movement 
is  made  pleasant  and  safe."  ^^ 

Bascom  holds,  as  did  Ricardo,  that  rent  arises  from 
two  causes :  the  limited  supply  of  natural  agents  ^^  and 
the  difference  in  productive  power  which  exists  between 
them. "  He  concludes,  however,  that  differences  in 
soil  are  only  a  measure  of  rent  rather  than  a  cause  of 
rent.  If  the  problem  of  rent  be  approached  either  from 
the  cost  of  production  under  the  most  unfavorable  cir- 
cumstances or  from  the  price  of  produce  on  the  market, 
differences  in  soil  appear  only  as  a  measure,  and  not 
as  a  cause  of  rent.  But  if  differences  in  soil  are  only 
a  measure  and  not  a  cause  of  rent,  it  follows,  contrary 
to  Ricardo's  thought,  that  rent  would  exist  were  all 
soils  of  the  same  quality.  Rent,  then,  would  find  its 
sole  origin  in  the  limited  capacity  of  the  earth  to  pro- 
duce commodities.  This  thought,  logically  speaking, 
makes  the  law  of  supply  and  demand  the  cause  of  rent. 
That  the  law  of  supply  and  demand  is  the  cause  of  rent, 
in  Bascom's  reasoning,  is  put  beyond  debate  when  he 
denies  Ricardo's   fallacy  of  inversion  and  teaches  that 

'' B<ascojTi.   Political  Economy,    154-155.      Quotation   from   155. 
"7b.,   153. 
^JK  156. 


l64  THE    RICARDIAN    RENT    THEORY 

the  price  determines  the  lowest  margin  of  cultivation 
rather  than  that  the  lowest  margin  of  cultivation  deter- 
mines the  price. 

Bascom  finds  a  limit  to  the  supply  of  produce  in  the 
law  of  diminishing  returns  (proportionality).  Conse- 
quently, it  is  because  of  this  law  that  rent  exists.  He 
says,  "On  the  supposition  of  equal  advantages  in  the 
various  soils,  it  is  the  decreasing  returns,  which,  land 
being  all  occupied,  shortly  begin  to  be  made  to  all  addi- 
tions of  effort,  that  occasion  rent."  Double  or  quadruple 
the  labor,  and  crops  will  not  proportionately  increase.  ^° 
Returns  refer  to  produce  rather  than  to  value.  Under 
static  conditions,  returns,  after  a  certain  point,  diminish 
per  unit  of  expenditure  upon  a  given  area.  Though 
the  limit  to  returns  is  never  reached,  yet  the  increasing 
resistance  encountered  in  intensive  cultivation  leads  to 
the  occupation  of  new  soils.  Extensive  cultivation  is 
opposed  by  such  causes  as  inferior  soils,  greater  distance 
from  markets,  transfer  of  tools,  and  the  like.  So,  while 
the  resistance  in  intensive  cultivation  leads  to  extensive 
cultivation,  the  difficulties  of  extension  lead  back  to 
intensive  cultivation.  The  result  is,  that  the  margins 
of  extensive  and  intensive  cultivation  tend  to  produce 
equal  profits  to  capital.  -^ 

Bascom  had  not  conceived  the  distinction  between 
static  and  historical  diminishing  returns.  In  keeping 
with  the  Ricardian  school,  he  holds  to  a  static  condition 
in  agriculture  and  to  a  dynamic  condition  in  the  case  of 
manufactures.  Adhering  to  an  instrumental  concept  of 
capital,  he  says,  "The  returns  of  labor  employed  in  any 
manufacture  tend  to  increase  by  an  increment  greater 
than  that  due  to  the  increment  of  labor.    This  proposi- 

**  Bascom,   Political  Economy,  153. 
^  lb.,  27-29. 


AM  AS  A   WALKER  165 

tion  we  state  in  connection  with  capital,  as  capital  is 
the  soil  of  this  kind  of  labor.  The  increase  in  the  returns 
of  mechanical,  as  opposed  to  agricultural  labor,  is  chiefly- 
due  to  two  things :  the  ever  enlarging  career  of  inven- 
tion and  the  accumulative  power  of  capital. 
In  the  processes  of  the  arts,  no  state  is  ultimate,  but  the 
same  powers  which  secured  the  present  give  promise  of 
something  beyond  it."  -- 

When  Basconi  wrote,  there  was  need  for  a  larger 
population  relative  to  our  natural  resources.  An  in- 
crease of  numbers  meant  an  increase  of  national  pros- 
perity. The  harnessing  of  new  lands,  the  better  utiliza- 
tion of  old  lands,  improvements  in  scientific  methods, 
in  seeds,  fertilization,  transportation  facilities,  and  the 
division  of  labor,  together  with  superior  marketing  facil- 
ities, were  dynamic  forces  in  agriculture.  So  powerful 
were  these  forces  in  agriculture  at  that  time  that  it  is 
strange  that  an  American  economist  should  think  of 
diminishing  returns  for  agriculture  and  of  increasing 
returns  for  manufactures.  The  reason  is,  in  the  writer's 
judgment,  that  Professor  Bascom  was  influenced  more 
by  the  prevailing,  the  English,  economics  than  by  the 
industrial  conditions  of  his  country. 

Turning  from  Bascom,  the  professor,  to  his  friend 
Amasa  Walker,  the  statesman  and  business  man,  we  find 
an  economics  more  in  harmony  with  industrial  demands. 
Bascom's  subtle  work  follows  the  classical  economists 
and  reflects  the  academic  environment.  Walker's  book 
is  little  more  than  a  comprehensive  treatise  of  money 
and  finance;  it  considers  political  economy  as  "emphati- 
cally a  business  science."  -' 

"  Bascom,  Political  Economy,  77. 

^  Walker,   A.,   Science   of   Wealth,  Pref.,  vi. 


1 66  THE    RICARDIAN    RENT    THEORY 

A  brief  presentation  of  Walker's  career  will  account, 
at  least  in  part,  for  the  nature  of  his  work.  Amasa 
Walker  "•*  (1799-1875)  was  born  at  Woodstock,  Con- 
necticut. He  was  always  feeble  and  delicate,  but  a  want 
of  physical  stamina  had  its  recompense  in  the  impulse 
given  him  to  study  and  reflection,  and,  perhaps,  in  a 
higher  capacity  for  intellectual  enjoyment.  He  took  the 
utmost  advantage  of  the  limited  opportunities  offered  by 
the  village  schools,  though  feeble  health  deprived  him 
of  the  benefits  of  a  college  education.  "In  the  intervals 
between  the  public  schools,  the  boy  used  to  recite  to 
the  Rev.  Dr.  Snell,  having  among  his  fellow  pupils 
William  Cullen  Bryant  and  Elijah  Meade."  -^ 

Amasa  Walker  had  some  experience  in  teaching;  he 
was  a  business  man  who  achieved  distinct  success ;  in 
politics,  he  was  a  public  spirited  leader.  His  political 
career  began  in  1829  when  he  entered  actively  into  the 
movement  against  Masonry,  which  culminated  in  the 
nomination  of  William  Wirt  for  the  presidency,  in  1832. 
He  was  a  strong  anti-slavery  advocate.  He  took  an 
exceedingly  active  part  in  the  Harrison  campaign,  "stren- 
uously advocating  the  establishment  of  the  Sub-Treasury 
system,  as  it  at  present  exists.  For  this  he  was  sub- 
jected to  a  degree  of  obloquy  which  it  would  be  diffi- 
cult to  conceive."  -®  As  a  result  of  his  long-cherished 
anti-slavery  convictions,  he  took  an  active  part  in  the 
formation  of  the  Free  Soil  Party  in  1848.  He  was  a 
member  of  the  national  convention  Avhich  nominated 
Van  Buren  for  the  presidency.  In  the  fall  of  that  year, 
he  was  elected  to  the  legislature  in  Massachusetts  and 

2<Palgrave,  1899.  Ill,  648-649.  Inf..  Encyc.  Amer.  Biography.  XT, 
438.  Memoir  of  Eon.  Amasa  Walker,  by  F.  A.  Walker,  Boston,  1888. 
Reprinted  from  New  England  Historical  and  Genealogical  Register,  Apr., 
1888. 

^Walker,  F.  A.,  Memoir  of  A.  Walker,  4. 

»>/6.,  8. 


AMASA   WALKER  167 

was  a  candidate  for  speaker  of  the  House,  represent- 
ing the  Free  Soil  and  Democratic  factions.  In  1849, 
he  attended  the  International  Peace  Congress  at  Paris, 
and  became  one  of  its  vice-presidents.  In  the  fall  of 
that  year,  he  was  elected  to  the  Senate  of  his  state.  Two 
years  later  he  was  elected  Secretary  of  State  for  Massa- 
chusetts, by  the  united  Free  Soil  and  Democratic  vote. 
In  1853,  he  was  a  member  of  the  convention  for  the  revi- 
sion of  the  Constitution  of  his  state.  Finally  his  political 
career  culminated  in  his  election  to  Congress  (1862), 
where  his  chief  interest  was  devoted  to  questions  of 
finance. 

Francis  A.  Walker  said  of  his  father,  "In  politics,  Mr. 
Walker's  history  was  as  follows :  he  was  brought  up 
among  Federalists;  became  a  Jackson  Democrat,  on  the 
issues  of  paper  money,  banking,  and  the  sub-treasury; 
joined  the  Liberty  party  in  1844;  helped  to  found  the 
Free  Soil  party  in  1848,  and  the  Republican  party  in 
1856."- 

At  the  age  of  fifteen,  he  went  into  the  mercantile  busi- 
ness, first  as  an  employee.  "Probably  no  clerk  was  ever 
more  diligent  and  faithful  or  had  a  higher  sense  of 
the  importance  of  his  work."  -*  Later  he  went  into 
business  for  himself,  and  extended  his  business  to  large 
proportions.  His  great  success  and  intelligent  interest 
in  the  mercantile  business  determined  largely  the  char- 
acter of  his  economic  thought.  His  interest  in  economics 
centered  on  the  medium  of  exchange.  Like  Ricardo, 
he  was  attracted  to  general  economics  through  a  study 
of  finance. 

In  1854,  he  was  influential  in  the  founding  of  the 
North  Brookfield  Savings  Bank,  of  which  he  was  the 

"lb.,  14. 
^Ib.,  4. 


l68  THE    RICARDIAN    RENT    THEORY 

first  president.     The   following  quotation   from   F.   A. 
Walker  regarding  his  father  is  significant : 

The  year  1857  was  one  of  great  import  to  the  life  of  Mr. 
Walker.  Early  in  that  year  he  began  the  publication,  in  Hunt's 
Merchants'  Magazine,  of  a  series  of  articles  on  political  econ- 
omy. The  series  had  already  progressed  so  far  as  to  give  Mr. 
Walker's  views  on  money,  when  the  financial  panic  of  1857 
commenced.  Almost  by  chance,  Mr.  Walker  attended,  early 
in  October,  a  large  meeting  of  the  merchants  of  Boston,  in- 
tended to  fortify  the  banks  of  that  city  in  their  determination 
to  maintain  specie  payments.  At  this  meeting,  Mr.  Walker 
took  the  ground  strongly  that  the  banks  could  not  possibly 
maintain  specie  pa>Tnents  for  more  than  two  weeks,  and  that 
it  was  desirable  they  should  at  once  suspend,  instead  of  caus- 
ing the  failure  of  the  best  merchants  of  the  city,  as  they  must 
inevitably  do,  by  refusing  discounts  in  a  vain  attempt  to  save 
their  own  so-called  honor.  This  speech  created  a  great  sensa- 
tion at  the  time,  and  gave  rise  to  a  heated  discussion  in  the 
public  press ;  but  the  suspension,  within  twelve  days,  of  every 
bank  in  Boston,  after  causing  the  failure  of  great  numbers  of 
the  best  mercantile  houses,  some  of  them  worth  millions  of 
dollars,  gave  so  striking  a  confirmation  to  Mr.  Walker's  views 
as  to  bring  him  into  prominence  as  an  authoritj-  on  finance, 
and  to  cause  him  to  be  invited  to  write  and  lecture  far  beyond 
the  limits  of  his  time  and  strength.  This  episode  may  properly 
be  considered  the  turning  point  in  Mr.  Walker's  intellectual 
career.  From  this  time  till  the  day  of  his  death,  the  subject 
of  the  currency  remained  the  most  absorbing  of  all  which 
had  previously  engrossed  his  mind,  and  his  interest  increased 
with  the  passage  of  years. 

Late  in  1857,  Mr.  Walker  published  a  pamphlet  on  the  Nature 
and  Uses  of  Money,  to  which  he  added  a  History  of  the  Wicka- 
hoag  Bank,  a  work  which  had  a  large  circulation.  Mr.  Walker's 
views  on  money,  as  presented  in  this  pamphlet,  were  essentially 
those  of  the  so-called  'Currency  School'  of  which  Lord  Over- 
stone,  Col.  Torrens,  and  Mr.  George  Warde  Norman  were  the 
leaders  in  England ;  and  of  which  Mr.  Walker,  Mr.  William 
M.  Gouge,  and  Mr.  Condy  Raguet  became  the  best  known  writ- 
ers in  the  United  States.  -^ 

Mr.  Walker's  enthusiastic  interest  in  railroad  con- 
struction in  1835  entitles  him  to  be  classed  as  a  pioneer 
in  the  history  of  American  railroads.  He  wrote  and 
made  speeches  in  behalf  of  extending  railroads  to  the 

^  lb.,  10-11. 


AMASA   WALKER  169 

west.  His  writings  gave  rise  to  a  public  meeting  in 
Boston  which  resulted  in  securing  the  stock  of  the  West- 
ern Railroad.  He  became  a  director  of  this  road  in 
1837.  Two  years  later,  he  visited  St.  Louis,  and,  in  a 
convincing  address,  urged  the  citizens  to  take  action  for 
securing  a  railway  connection  with  the  East.  So  strongly 
did  he  have  the  mercantile  viewpoint  that  he,  in  reality, 
made  the  railroad  question  a  merchant's  problem.  The 
thesis  of  his  western  speech  was  that  because  of  the 
difficulties  of  water  transportation,  "The  merchant  can- 
not depend  on  getting  his  goods  promptly. 
This  is  a  great  evil — all  are  injured,  many  ruined  by 
it.  Goods  purchased  for  the  Fall  sales  do  not  get  to 
the  place  of  their  destination  until  Spring.  This  occa- 
sions great  loss  and  embarrassment  to  the  trader,  much 
disappointment  and  inconvenience  to  his   customer."  ^° 

How  railroads  would  develop  western  lands,  influence 
values  and  rents,  distribute  the  population,  cause  the 
erection  of  cities,  towns,  and  industries,  were  not  em- 
phasized. F.  A.  Walker  says,  "At  that  time,  Mr. 
Walker's  suggestion  that  a  man  might  yet  go  from 
Boston  to  St.  Louis  in  five  days,  or  less,  and  eat  and 
sleep  on  the  cars,  created  no  little  amusement."  ^^ 

Mr.  Walker's  mercantile  interests,  his  studies  in  ex- 
change and  currency,  his  political  affiliations  and  his 
opinion  that,  "economically,  it  will  ever  remain  true, 
that  the  government  is  best  which  governs  least,"  ^^ 
these  naturally  led  him  to  accept  the  principle  of  the 
freedom  of  trade. 

When  Walker  wrote  his  text,  slavery  was,  and  had 
been,  the  question  of  absorbing  interest.  With  the  earlier 
questions  of  the  tariff,  the  sub-treasury,  and  others  set- 

*  Ih.,   6-7,   gives  his  reported  remaris. 

31J&..    8. 

32  Walker,   A.,   The  Science   of  Wealth,   92. 


lyo  THE    RICARDIAN    RENT    THEORY 

tied  for  the  time  being,  and  after  the  pubhcation  of 
Mill's  work,  the  classical  school  came  more  into  prom- 
inence. Another,  and  doubtless  the  strongest,  influence 
that  caused  Walker  to  ally  himself  with  the  classical 
school  was  his  study  of  Adam  Smith  and  Ricardo.  In 
1840-41,  he  went  to  Florida  for  his  health,  carrying  with 
him  the  works  of  Adam  Smith  and  Ricardo.  This  stay 
in  Florida  gave  him  opportunity  for  much  reflection. 
In  his  work  on  general  economics,  his  references  are 
almost  entirely  to  the  classical  economists.  On  questions 
other  than  finance,  he  refers  only  to  George  Opdyke  of 
all  the  earlier  American  economists.  But  of  the  Eng- 
lish economists  to  whom  he  refers  and  with  whom  he 
evidences  an  acquaintanceship  are  Cairnes,  Malthus, 
Ricardo,  McCulloch,  Fawcett,  J.  S.  Mill,  and  Adam 
Smith.  He  also  refers  to  Bastiat  and  Levi.  He  refers 
to  Adam  Smith  far  more  than  to  other  economists.  He 
calls  J.  S.  Mill  the  ablest  of  living  writers,  ^^  and  com- 
pliments Bastiat  quite  as  unreservedly.  ^* 

Regarding  population,  Walker  says  that  the  glut,  fam- 
ine, and  death  theories  of  Malthus  have  exhausted  the 
direct  horrors  of  the  subject.  He  teaches  that  all  "Brit- 
ish philosophy  of  population  is  perverted  and  diseased 
from  its  root."  This  philosophy  comes  out  of  social 
wrongs  and  false  political  institutions.  It  strives  to 
apply,  as  a  universal  condition  of  human  being,  the 
miserable  results  of  local  misrule.  ^^ 

He  says,  "The  two  postulates  of  Malthus  are:  (i) 
that  subsistence  is  stationary  or  retrogressive;  (2)  that 
propagation  is  a  constantly  operating  force,  enlarging 
population  in  some  assignable  ratio.  .  .  .  — There 
are  here  three  fallacies:  (i)  that  subsistence  is  not  pro- 

^  lb.,  pref.,   viii. 
3*  lb. 
»/6.,  452. 


AMASA   WALKER  171 

gressive,  (2)  that  population  necessarily  increases,  (3) 
that,  even  if  these  were  granted,  there  would  exist  be- 
tween them  any  such  melancholy  relation  as  is  as- 
sumed." ^® 

He  maintains  that,  under  wise  and  intelligent  culture, 
the  soil  will  grow  more  fertile,  that  mechanical  advance- 
ment will  free  more  labor  from  the  industrial  arts  to 
go  into  agriculture,  and  that  the  possibilities  of  chemical 
discoveries  and  other  aids  to  agriculture  justify  almost 
any  degree  of  expectation  for  future  increase.  ^''  He 
claims  that  the  forces  opposing  the  growth  of  numbers 
are  quite  as  strong  as  those  encouraging  such  growth, 
that  the  same  God  is  author  of  both  positive  and  nega- 
tive forces,  and  that,  consequently,  they  must  be  given 
equal  weight  in  all  calculations  of  human  propagation.^^ 

Resorting  to  the  usual  American  argument,  he  main- 
tains that  rent  is  due  not  to  the  niggardliness  of  nature 
but  to  a  faulty  distribution : 

It  is  of  no  consequence  whether  Manchester  or  Birmingham 
can  raise  their  own  breadstuffs  within  their  corporate  limits, 
if  they  can  create  values  which  will  lay  all  the  markets  of 
the  world  under  contribution.  ^^     .      .      . 

In  England,  bad  laws,  passed  by  class  legislation;  oppressive 
institutions,  the  relics  of  feudalism ;  onerous  taxation,  incurred 
by  the  senseless  war  system;  and  unjust  monopolies,  created 
for  selfish  purposes — have  combined  to  cause  the  ignorance, 
poverty,  and  degradation  of  the  people,  and  to  make  the  benefi- 
cent agencies  of  reproduction  a  partial  curse.  The  laborers 
of  England  suffer  for  the  commonest  necessaries  of  life,  while 
England  is  the  richest  nation  on  the  face  of  the  globe.  Unques- 
tionably, the  value  of  the  total  production  of  English  industry 
amounts  to  five  times  the  value  of  the  simple  necessaries  of 
life  for  her  whole  population.  Now,  if  labor  starves,  is  it 
the  fault  of  nature?  The  density  of  population  has  nothing 
to  do  with  it.  It  is  because  the  common  people  have  so  little 
influence  on  the  government;  because  the  land  is  held  for  the 
pleasures  and  dignity  of  the  lordly  few ;  and  because  the  na- 
tional majority  is  borne  down  by  a  powerful,  selfish,  and  grasp- 
s'/&.,  452-453.  ST  7b.,  453. 
»/6.,  453-456.      ^  lb.,  456. 


172 


THE    RICARDIAN    RENT    THEORY 


ing  aristocracy.  Though  the  people  suffer,  it  is  because  of 
nothing  in  the  extent  or  fertility  of  their  soil.  But  for  a  com- 
plicated, legalized  system  of  robbery  and  wrong,  every  man, 
woman,  and  child  in  the  United  Kingdom  might  be  as  well 
fed,  clothed,  and  educated  as  are  the  inhabitants  of  the  United 
States,  and  as  much  more  so  as  England  is  today  richer.  Any 
man  and  any  people  that  can  create  value  can  command  sub- 
sistence in  God's  way.  *° 

On  the  whole,  Walker  opposes  Malthus  at  every  point  ; 
he  accuses  Malthus  of  shaping  his  theory  to  the  local 
situation  in  England.  Walker's  theory  is  an  American 
theory,  in  harmony  with  the  public  opinion  of  this  coun- 
try previous  to  the  Civil  War.  His  point  of  view  is 
that  of  the  practical  business  man.  When  he  wrote,  our 
frontier  still  held  out  its  promising  opportunities.  Pop- 
ulation was  still  the  short  factor  in  our  industries,  and 
capital  was  demanding  a  larger  supply  of  labor.  The 
theory  that  "a  larger  population  means  abundance  rather 
than  scarcity"  was  true  when  Walker  wrote. 

In  my  judgment.  Walker  criticised  a  book  which  he 
had  never  read  when  he  opposed  Malthus.  He  gives  no 
citations  to  indicate  that  he  had  read  Malthus'  essay;  he 
attempts  a  statement  of  Malthus'  thesis  in  two  postulates, 
and  both  of  them  are  wrong;  and  he  thinks  he  has 
answered  Malthus  whereas  in  reality  he  has  only  stated 
another  point  of  view. 

In  his  discussion  of  population,  I  find  little  with  which 
Malthus  would  not  have  readily  agreed.  He  differs  from 
Malthus,  not  in  content,  but  in  point  of  emphasis  and 
viewpoint.  Walker,  like  the  national  economists  we 
have  reviewed,  was  arguing  a  different  question  when 
he  opposed  Malthus.  Malthus  was  arguing  upon  the 
basis  of  what  is  under  the  existing  circumstances  of  a 
given  time,  or  a  given  stage  of  human  progress.    Walker 

^  lb.,  457. 


AMASA    WALKER  173 

took  the  idealistic  point  of  view,  and  attempted  to  paint 
what  would  be  under  future,  more  advanced,  and  supe- 
rior conditions.  Two  men,  one  with  the  static  and  the 
other  with  the  dynamic  point  of  view,  may  argue  the 
same  question  of  the  pressure  of  population  upon  sub- 
sistence, and  use  precisely  the  same  terms,  and  with 
pure  reason  and  sound  logic  come  to  conclusions  wholly 
dissimilar.  It  was  not  because  our  early  economists 
were  illogical  that  they  failed  to  make  a  case  against 
Malthus;  it  was  because  their  viewpoint  was  wholly  dif- 
ferent that  they  failed  to  attack  that  which  Malthus 
really  taught. 

It  is  the  accepted  opinion  that,  although  Amasa 
Walker  denies  Malthusianism,  he  accepts  unreservedly 
the  Ricardian  theory  of  rent.  We  have  just  seen  that 
his  difference  from  Malthus  was  only  a  matter  of  empha- 
sizing particular  phases  of  thought  which  would  appeal 
to  an  American  business  man  of  his  time,  and  that  he 
said  nothing  derogatory  to  the  real  teachings  of  Malthus. 
Contrary  to  the  accepted  opinion,  I  find  that  he  teaches 
a  theory  of  rent  widely  different  from  that  held  by 
Ricardo. 

Walker  defines  rent  as  follows :  "Rent  is  paid  for 
the  use  of  land  and  its  appendages,  which  together  are 
called  real  estate."  *^  He  is  always  careful  to  speak  of 
rent  as  a  payment  by  one  person  to  another,  whereas 
Ricardo  often  speaks  of  rent  as  the  surplus  accruing 
to  the  proprietor  who  tills  his  own  soil.  Walker  says 
that  natural  powers  confer  no  value.  *^  "We  have  said 
that  nature  adds  value  to  nothing.  Though  unceasingly 
at  work  for  man,  she  receives  no  compensation.  She 
creates  utilities  beyond  computation,  but  does  all  gra- 

«7b.,  294. 

*^Ib..    10,    12,    16. 


174  THE    RICARDIAN    RENT    THEORY 

tuitously.  Wind,  water,  and  steam  are  most  efficiently 
engaged  in  producing  commodities  necessary  to  the  wel- 
fare of  mankind;  and  the  earth  is  unceasingly  active 
to  bring  forth  man's  food  in  its  many  forms.  Yet  all 
is  done  without  adding  to  the  wealth  of  the  world.  The 
forces  'work  for  nothing,'  and  hence  confer  no  value. 
If  we  look  to  the  fertility  of  the  land,  by  far 
the  greatest  of  all  the  natural  forces  engaged  in  pro- 
duction, we  shall  find  that  it  confers  no  value."  "  But 
production  consists  in  the  creation  of  values ;  **  there- 
fore, since  land  is  non-productive,  it  follows  that  labor 
and  capital  produce  all.  *^ 

We  are  led  to  ask,  What  of  the  three  productive 
agencies :  land,  labor,  and  capital  ?  "Wealth  includes 
all  objects  of  value";  *®  land  is  an  object  of  value;  there- 
fore land  is  wealth.  "All  capital  is  wealth,  but  all  wealth 
is  not  capital.  .  .  .  Wealth  is  as  it  is  had;  capital, 
as  it  is  used."  ^'^  But  land  is  used  wealth;  therefore, 
land  is  capital.  Very  unlike  Ricardo,  then,  he  classifies 
land  as  capital,  *^  and  speaks  of  fixed  capital  as  yielding 
a  rent.  *''  Consequently,  in  his  classification  of  pro- 
ductive agencies,  there  appear  only  two  classes :  capital 
and  labor.  ^° 

If  land  be  capital,  why  not  denominate  that  which 
is  paid  for  the  use  of  land  interest  rather  than  rent? 
He  says,  "Capital  is  loaned  in  two  general  forms:  ist, 
when  invested  with  a  permanent  character  and  having  a 
fixed  place,  as  houses,  fields,  etc.,  its  compensation  is 
called  rent."  '^^    When  he  speaks  of  "the  man  who  owns 

«76.,  16-17. 

**Ib.,  Bk.  II,  Chap.  I. 

*^Ih.,  60. 

*'^Ib.,  7. 

*'' lb.,  55. 

^Ib.,  57,  253. 

«»/6.,  253-280. 

««/6.,  60. 

"/&.,  253. 


AMASA   WALKER  175 

capital  and  receives  his  compensation  for  its  use  in  the 
shape  of  rent,""  our  author  has  in  mind  fixed  capital. 
He  says,  "Improvements,  more  or  less  permanent,  are 
investments  of  capital  in  real  estate,  changing  the  in- 
come from  the  form  of  interest  to  that  of  rent."  ^^ 

His  thought  may  be  briefly  summarized  as  follows : 
productive  agents  consist  of  labor  and  capital;  there  are 
tw^o  classes  of  capital — circulating  and  fixed.  The  for- 
mer bears  interest;  the  remuneration  for  the  latter  is 
denominated  rent.  Capital,  however,  is  past  labor  hav- 
ing taken  form ;  ^*  then,  like  Carey,  he  must  argue  that 
rent  is  paid  for  improvements  on  the  land.  ^^  So,  unre- 
servedly to  style  Walker  a  disciple  of  Ricardo  is  at  once 
fallacious.  Ricardo,  emphasizing  the  original  and  inde- 
structible qualities  of  the  soil,  teaches  a  pure  land-rent 
concept;  Walker,  speaking  of  land  as  a  free  gift  of 
nature  from  which  "value  is  not  derived,"  ^®  emphasizes 
the  capital-concept  and  teaches  that  rent  is  but  a  remun- 
eration for  the  use  of  fixed  capital. 

Walker  brings  forward  four  elements  of  rent :  loca- 
tion, difference  of  fertility,  importations,  and  improve- 
ments more  or  less  permanent.  Location  "grows  out 
of  the  social  conditions  of  man."  ^^  Assume  that  men 
live  as  isolated  beings,  and  that  there  exists  enough  land 
for  all,  and  that  each  part  is  equally  productive,  then 
rent  could  not  exist.  ^^  Once  men  are  gathered  into  vil- 
lages and  communities,  however,  rent  quickly  makes  its 
appearance.  ^^     Natural   differences   aside,    men    prefer 

«2/&.,  280. 
^Ib.,  299. 
^Ib.,  19. 
M/b.,  294. 
S8/6.,  295. 
^Ib.,  296. 
^  lb.,  296-297. 
^  lb.,  296. 


176  THE    RICARDIAN    RENT    THEORY 

locations  that  are  central  respecting  public  buildings  for 
the  accommodation  of  all  (schoolhouse,  church,  etc.)- 
Points  at  which  the  population  can  most  readily  assemble, 
and  which  form  the  natural  center  of  business  or  land- 
ing-places, or  where  warehouses  are  put  up  for  the  com- 
merce of  the  settlement,  are  factors  that  cause  location 
to  create  a  rental  independent  of  all  other  considera- 
tions. ®^ 

On  the  difference  of  fertility.  Walker  says,  "Mr. 
Ricardo,  we  believe,  first  brought  out  this  principle  clear- 
ly in  his  Political  Economy,  London,  1819."  ®^  He  as- 
sumes four  grades  of  land  capable  of  producing  forty, 
thirty,  twenty,  and  ten  bushels  respectively,  with  the 
same  labor.  At  first.  No.  i  produces  all  the  corn  neces- 
sary and  no  rent  accrues ;  when  population  so  increases 
as  to  bring  No.  2  under  cultivation,  then  No.  i  will  bear 
a  rent  of  10.  Finally,  when  No.  4  comes  under  culti- 
vation. No.  I  bears  30,  No.  2  bears  20,  No.  3  bears  10, 
and  No.  4  bears  no  rent.  ^-  Walker  fails  to  take  cog- 
nizance of  the  fact  that  intensive  cultivation  must  keep 
pace  with  extensive  cultivation  in  order  that  equal  profits 
may  accrue  to  capital  on  extensive  and  intensive  margins. 

Walker's  third  element  of  rent,  importations,  is  but 
an  application  of  the  extensive  cultivation  argument.  In 
the  above  example.  No.  4  produced  no  rent;  but  if  all 
the  land  in  a  country  were  occupied  and  freights  had 
to  be  paid  to  import  corn,  then  No.  4  would  bear  a  rent 
equal  to  its  differential  advantage.  ®^ 

His  fourth  element  of  rent,  improvements,  consists  of 
durable  investments  in  real  estate.  Fertilizing,  drainage, 
deep  ploughing,  and  the  like  are  included.     "For  every 

"o/fe.,   296-297.      See  also  Merchants'  Magazine    (1860),  xlii,   306. 
•1/6.,   298  n. 
02 /b.,  297-298. 
«/{).,  298. 


AM  AS  A    WALKER  177 

such  appliance,  wisely  made,  a  rent  is  received,  supposed 
to  be  equivalent  to  the  expenditure  incurred."  ®*  Note 
the  difference  here  between  Walker  and  Ricardo.  Ri- 
cardo  insists  that  what  Walker  here  denominates  rent 
is  not  rent,  but  profits  on  capital.  Walker,  however, 
centers  his  whole  discussion  of  rent  upon  this  point.  ^^ 

It  is  strange  that  Walker  should  be  called  a  disciple 
of  Ricardo  on  the  rent  problem.  Walker's  definition 
makes  rent  a  payment  for  fixed  capital  and  never  a  pay- 
ment for  the  use  of  land  as  such ;  Ricardo's  definition 
was  the  exact  opposite.  Walker  always  makes  rent  a 
payment  by  one  person  to  another.  Ricardo  speaks  of 
rent  as  a  usance  at  times,  and  as  a  price  at  times.  Walker 
thinks  the  rent-problem  is  of  little  importance.  The 
exact  opposite  is  Ricardo's  view.  Walker's  emphasis 
is  upon  city  rents,  while  Ricardo  reasons  almost  wholly 
on  farmers'  rents.  Walker  thinks  that  land  yields  rent 
because  of  the  expenditure  upon  its  improvement. 
Ricardo  considers  land  ready  for  the  plough.  Walker 
attempted  a  denial  of  Malthusianism ;  this  theory  was 
an  essential  element  in  Ricardo's  rent  doctrine.  Walker 
treated  diminishing  returns  not  at  all,  nor  did  he  even 
hint  at  intensive  cultivation.  Ricardo's  theory  of  rent 
was  a  deduction  from  the  law  of  diminishing  returns, 
and  his  emphasis  was  equally  strong  on  extensive  and 
intensive  cultivation.  The  one  classifies  land  as  capital; 
the  other  condemns  strongly  such  a  classification.  Their 
views,  therefore,  are  more  antithetical  than  identical. 

In  this  chapter,  we  have  found  that  John  Bascom, 
the  college  professor  who  was  devoted  to  theology  and 
philosophy,  acquired  his  knowledge  and  bent  in  eco- 
nomics from  the  classical  texts  rather  than  from  a  touch 

86/6.,  Bk.  IV,  Chap.  VII. 


178  THE    RICARDIAN    RENT    THEORY 

with  practical  affairs.  His  thought  was  in  accord  with 
the  Malthusian  theory  of  population.  He  looked  upon 
the  law  of  diminishing  returns  as  applicable  only  to  agri- 
culture, whereas  a  law  of  increasing  returns  ruled  in 
the  field  of  manufacture.  To  this  as  well  as  to  the  form 
of  expression,  the  English  economists  would  not  object. 
But  he  departed  from  Ricardo  when  he  taught  that  the 
price  of  the  product  determines  the  margin,  thus  making 
differences  in  soil  no  more  than  a  measure  of  rent.  He 
concluded,  logically,  that,  if  all  soil  were  of  equal  quality, 
rent  would  exist. 

Unlike  Bascom,  we  have  found  that  Amasa  Walker 
was  a  practical  business  man  who  was  denied  a  college 
education  because  of  poor  health.  He  objected  to  Mal- 
thusianism,  regarded  land  as  capital,  and  at  times  spoke 
of  fixed  capital  as  earning  rent.  Some  economists  have 
classified  Walker  as  a  disciple  of  Ricardo;  but  this 
was  an  error  from  the  fact  that  the  form  of  his  expres- 
sion was  mistaken  for  the  substance  of  his  teaching. 
The  next  chapter  will  review  the  writings  of  A.  L.  Perry 
who  undertook  a  somewhat  wider  departure  from  the 
English  economists  than  did  either  of  the  authors  re- 
viewed in  this  chapter. 


CHAPTER  IX 
ARTHUR  L.  PERRY 

PROFESSOR  A.  h.  PERRY^  (1830-1905)  was 
educated  at  Williams  College  and  taught  Politi- 
cal Economy  at  the  same  institution.  He  was 
a  frequent  contributor  to  The  Springfield  Republican 
and  to  The  New  York  Evening  Post.  ^  His  important 
economic  writings  consist  of  two  texts :  Political  Econ- 
omy (New  York,  1865)  and  The  Introduction  to  Politi- 
cal Economy  (1877).  He  delivered  numerous  lectures 
in  defense  of  the  freedom  of  trade,  ^  and  carried  on  a 
series  of  debates  with  Horace  Greeley  in  opposition  to 
protection. 

The  works  of  Perry,  like  those  of  Bascom,  Bowen, 
and  Amasa  Walker,  appeared  at  a  period  when  this 
science  was  at  a  low  ebb.  His  work  was  written  for 
the  classroom.  No  great  national  problem  called  it  into 
existence;  rather  his  book  was  the  product  of  a  closet 
philosopher,  and  such  products  are  as  likely  to  appear 
out  of  season  as  in.  Perry  was  an  open-minded  man, 
who,  without  prejudice  and  with  a  thirst  for  knowledge, 
read  broadly.  He  acted  upon  the  principle  that  the 
teacher  must  ever  be  a  learner,  simple  and  humble  and 
sincere.  His  was  one  of  the  most  popular  texts  that 
has  appeared  on  this  side  of  the  Atlantic  and  the  secret 
of  its  success  was  its  simplicity. 

He  was  one  of  the  best  equipped  economists  that 
America  produced  previous  to   1885.     His   training  in 

^  Appleton's   Encyc.   Amer.    Biog.,   TV,    734. 

2  Outlook,  July  22,   1905,   LXXX,   703-704. 

3  Ida  M.  TarbeU  in  Arnericcm  Magazine,  LXIII,  476,  LXIV,  175. 


l8o  THE    RICARDIAN    RENT    THEORY 

economics  was  far  superior  to  that  of  Bowen  or  Bascom. 
But  whereas  Bowen  often  lost  sight  of  fundamentals  in 
his  labyrinth  of  details,  Perry  leaned  strongly  in  the  op- 
posite direction.  He  frequently  failed  to  harmonize  his 
general  thought  with  the  industrial  facts  of  life,  and 
often  classified  together  things  somewhat  unlike  in  na- 
ture. This  is  the  chief  criticism  to  be  made  of  Perry. 
The  year  1863  was  a  turning  point  in  Perry's  eco- 
nomic thought.  Previous  to  that  date  "for  ten  or  twelve 
years  he  had  been  retailing  the  usual  doctrines  of  Smith, 
Ricardo,  Senior,  and  Mill."  *     Perry  says : 

Almost  from  the  outset  of  my  studies,  however,  and  increas- 
ingly as  the  years  went  by,  I  kept  asking  myself,  "What  is 
Political  Economy  about?"  "Within  what  precise  field  do  its 
inquiries  lie?"  "Is  it  possible  clearly  and  simply  to  circumscribe 
that  field?"  I  could  see  no  solid  reason  why  economical  dis- 
cussions should  be  confined  to  tangible  commodities,  and  not 
include  as  well  personal  services  rendered  for  pay,  and  also 
credits  of  all  kinds.  I  could  not  gain  from  the  general  terms 
used  by  the  writers  a  firm  conception  of  the  science  as  includ- 
ing these  three  classes  of  things.  The  word  "Wealth,"  which 
figured  so  largely  in  all  the  books,  gave  no  satisfaction  in  this 
regard,  for  this  best  of  reasons,  that  I  never  could  gain  with 
all  my  strivings  a  clear  and  generalized  conception  of  just 
what  that  word  covered.  I  found  besides  that  no  two  of  the 
writers  had  the  same  notion  of  the  meaning  of  that  word,  and 
that  no  one  of  them  all  had  given  an  adequate  and  self-con- 
sistent definition  of  it.  I  talked  this  matter  over  repeatedly  with 
Professor  Bascom,  at  that  time  my  colleague  and  always  my 
friend,  and  suggested  to  him  a  way  of  egress  from  the  diffi- 
culty; and  my  mind  had  almost  reached  the  conclusion  in  which 
it  has  now  rested  for  many  years  with  perfect  composure,  when 
my  late  friend,  Amasa  Walker,  who  was  even  then  a  political 
economist  of  reputation,  though  he  had  not  yet  published  his 
Science  of  Wealth,  recommended  to  me  Bastiat's  Harmonies 
of  Political  Economy.  I  had  scarcely  read  a  dozen  pages  in 
that  remarkable  book,  when  the  field  of  the  science,  in  all  its 
outlines  and  landmarks,  lay  before  my  mind  just  as  it  does 
to-day.  I  do  not  know  how  much  I  brought  to  that  result, 
and  how  much  towards  it  was  derived  from  Bastiat.  I  only 
know  that,  from  that  time,  Political  Economy  has  been  to  me 

*  MacLeod,   The   History  of  Economics,  154. 


ARTHUR   L.   PERRY  i8i 

a  new  science ;  and  that  I  experienced  then  and  thereafter  a 
sense  of  having  foiuid  something,  and  the  cognate  sense  of 
having  something  of  my  own  to  say.  •"' 

Our  author  acknowledges  his  indebtedness  to  Bastiat. 
On  land  rent,  his  discussion  shows  close  similarity  to 
that  of  Bastiat.  But  he  goes  farther  than  Bastiat  and 
entirely  abandons  the  use  of  the  word  wealth  as  a  scien- 
tific term.  "The  most,"  he  says,  "of  what  is  original 
in  my  book  is  an  immediate  or  else  an  indirect  result 
of  absolutely  dropping  from  the  start  the  use  of  the 
word  'wealth*  as  a  technical  term.  So  far  as  I  know, 
I  was  the  very  first  economist  to  do  this."  * 

He  defines  a  science  as  a  "body  of  exact  definitions 
and  sound  principles  educed  from  and  applied  to  a  single 
class  of  facts  or  phenomena."  '' 

Political  economy,  in  his  thinking,  is  the  science  which 
addresses  itself  to  that  circumscribed  class  of  facts  or 
phenomena  of  which  value  is  the  characteristic.  ^ 

We  place  the  field  of  the  science  just  where  Whately  places 
it, — "Catallactics,  or  the  science  of  exchanges" ;  just  where  the 
continental  Kiehl  puts  it, — "Die  Lehre  von  den  Werthen,"  The 
doctrine  of  values;  and  just  where  MacLeod  locates  it,  though 
we  do  not  like  the  term  "quantities"  in  this  connection, — "The 
Science  which  treats  of  the  lazvs  which  govern  the  relations  of 
exchangeable  quantities."  Any  one  of  the  three  following  defi- 
nitions, which  are  the  precise  equivalents  of  each  other,  namely, 
the  science  of  Sales,  the  science  of  Exchanges,  the  science  of 
Value,  gives  a  perfectly  definite  field  to  Political  Economy.  We 
shall  use  the  three  interchangeably,  though  for  the  present 
emphasizing  the  last.  ^ 

By  value,  Perry  means  "the  relation  of  mutual  pur- 
chase established  between  two  services."  ^^  He  says, 
"Two  persons,  two  things,  two  desires,  two  efforts,  two 

^  Perry,    Political   Economy,   viii-ix,    introduction 
8/&.,  X.       "^  lb.,  89.       <>  lb.,  112-115. 
»/&.,   112-113.       ^°  lb.,  131. 


l82  THE    RICARDIAN    RENT    THEORY 

estimates,  and  two  satisfactions,  form  the  circle  of 
value."  ^^  "Value,"  he  says,  "is  the  sole  subject  of  our 
science.  .  .  .  While  value  always  takes  its  rise  in 
the  desires  of  men,  it  is  never  realized  except  through 
the  efforts  of  men,  and  through  these  efforts  as  mutually 
exchanged."  ^- 

Having  considered  his  training,  his  dissent  from  cer- 
tain classical  views,  his  idea  of  the  scope  and  definition 
of  the  science,  we  are  prepared  to  follow  his  peculiar 
teaching  on  the  population-rent  problem. 

The  population  problem  receives  little  attention  at  the 
hands  of  Perry.  He  says,  "Malthusianism,  as  it  has 
been  called,  is  really  a  topic  of  Physiology  and  not  of 
Political  Economy  at  all.  Political  Economy  presup- 
poses the  existence  of  persons  able  and  willing  to  make 
exchanges,  before  it  begins  its  inquiries  and  generaliza- 
tions. How  they  came  into  existence,  the  rate  of  their 
natural  increase,  and  the  ratio  of  this  increase  to  the 
increase  of  food,  however  interesting  as  physiological 
questions,  have  clearly  nothing  to  do  with  our  science."  ^^ 

He  satisfies  himself  with  a  very  brief  and  inadequate 
statement  of  the  Malthusian  doctrine,  ^*  and  then  gives 
briefly  his  reasons  for  dissent.  Time  and  again,  in  our 
review  of  the  earlier  American  economists,  we  have  met 
the  arguments  he  uses  to  refute  this  doctrine. 

(a)  Population  draws  not  only  upon  the  soil  it  occu- 
pies, but  upon  the  world  at  large  for  its  support.  ^^ 

(b)  Moral  and  religious  training  brings  men  under 
the  influence  of  reason  and  affection,  and  under  this 
influence  preventive  checks  silently  and  effectually  be- 
come operative.  ^^ 

^Ib.,  164.       ^Ih.,  165. 
M/6.,  238.       "76.,  238-239. 
15/6.,  239.       "/&. 


ARTHUR    L.    PERRY  183 

(c)  The  history  of  the  world  shows  that  food  and 
comforts  have  more  than  kept  pace  with  the  growth  of 
population.  " 

(d)  "He  who  is  the  author  of  the  laws  is  author  also 
of  natural  counter-workings  of  them,  so  that  a  particular 
tendency  towards  their  coming  into  conflict  is  confidently 
denied."  ^« 

(e)  Each  consumer  is  also  a  producer.  ^^ 

(f)  "The  famines  of  the  world  have  been  caused 
more  by  the  indolence  and  want  of  foresight  of  indi- 
viduals, and  by  the  maladministrations  of  governments, 
than  by  the  law  of  population."  -° 

Perry,  at  the  outset  of  his  discussion  on  land,  points 
out  the  vast  difference  between  land  as  a  physical  thing 
and  land  as  a  valuable  thing.  ^^  The  former  is  God's 
free  bounty;  the  latter  is  produced  through  human  ef- 
forts. The  "original  utility" — the  utility  of  the  land  as 
God  gave  it  to  us — always  remains  a  free  good.  No 
bounty  of  God  is  intercepted,  through  exclusive  appro- 
priations by  man,  in  its  descent  to  mankind  as  a  whole.  ^- 
What  men  receive  gratuitously,  they  must  gratuitously 
transmit.  This  principle  still  holds  true  after  all  the 
land  has  been  taken  up.  '^  "Human  motives  are  such, 
and  everything  is  so  providentially  arranged,  that  men 
cannot,  as  a  rule,  sell  God's  gifts ;  it  would  be  derogatory 
to  the  Giver,  if  they  could."  '*  He  further  says,  "As  a 
matter  of  fact  and  experience,  lands  are  absolutely  value- 
less until  some  portion  of  human  effort  has  been  ex- 
pended on  them,  or  in  reference  to  them."  -^    He  argues 

"lb. 

«  lb.,  239. 
«/&.,  239-240. 
20/&.,  240. 
«/b.,  276. 
22/6.,  276-8. 
'^  lb.,  278. 
"76.,  279. 
!*/6.,   279. 


184  THE    RICARDIAN    RENT    THEORY 

that  the  value  of  our  government  lands  is  due  to  human 
effort,  due  to  the  facts  that  they  have  been  surveyed, 
that  local  governments  have  been  provided  for  settlers, 
and  that  mail  facilities  and  other  privileges  have  been 
guaranteed  to  them. '® 

It  is  not,  then,  the  "original  utility"  for  which  we  pay  ; 
rather  it  is  the  "new  utility,"  or  the  utility  added  to  the 
land  by  means  of  human  effort,  that  commands  a 
price.  ^^  Now,  if  the  value  of  land  be  due  to  labor, 
would  it  not  follow  that  the  value  of  lands  would  be 
in  proportion  to  labor  ?  No ;  Perry,  like  Carey,  would 
reply  that  it  is  not  the  original  cost  of  production  but 
rather  the  cost  of  reproduction  that  determines  value. 
He  says : 

The  progress  of  capital  and  inventions  enables  similar  work 
to  be  done  now  at  greater  advantage,  and  consequently  the 
results  of  former  work  have  fallen  in  value.  While,  therefore, 
value  in  land  arises  solely  in  connection  with  human  eflforts 
of  some  sort  standing  in  some  relation  to  that  land,  it  is  im- 
portant to  observe  that  the  value  is  not  always  proportioned 
to  those  eflforts.  The  efforts  may  have  been  misdirected ;  the 
desires  calculated  upon  may  have  taken  another  turn ;  the  util- 
ity sought  to  be  conferred  may  not  find  the  requisite  natural  util- 
ity underneath ;  and  so,  there  is  a  greater  diversity  in  the  value 
of  lands  than  in  the  amount  of  efforts  expended  upon  them,  ^s 

Like  Carey,  he  makes  saleable  land  a  commodity  for 
the  same  reason  that  a  machine  is  a  commodity :  in  the 
one  case,  the  free  bounty  of  nature,  iron,  is  transformed 
by  human  effort  into  a  machine ;  in  the  other  case,  the 
free  bounty  of  nature,  land,  is  transformed  by  human 
effort  into  valuable  land. 

He  makes  some  exceptions,  which  he  terms  unim- 
portant, to  his  theory  of  land-values.     Unusual  fertility, 

28 /ft. 

^  Ih.,  277. 
^Ih.,  280. 


ARTHUR    L.   PERRY  185 

excellent  locations,  lands  containing  rich  mines  or  water 
power,  are  the  exceptions  cited.  Why  cite  these  as  ex- 
ceptions to  his  theory? 

Perry's  is  an  exchange  economy  according  to  his  own 
definition;  service  for  service  is  the  central  concept  in 
his  system.  His  service-for-service  doctrine,  as  he  uses 
it,  is  but  a  crude  application  of  the  law  of  supply  and 
demand.  Perry  did  not  thoroughly  conceive  the  cost-of- 
reproduction  doctrine  which  he  borrowed  from  Carey,, 
because  Carey,  who  originated  the  cost-of-reproduction 
as  a  distinct  theory  of  value,  did  not  have  in  mind,  when 
he  used  this  idea,  the  amount  of  labor  it  would  take  to 
reproduce  a  waterfall,  but  rather  the  amount  of  value 
expressed  in  labor  for  which  this  waterfall  would  ex- 
change. In  Carey's  thought,  the  law  was  general.  In 
Perry's  thought,  evidently  it  could  refer  only  to  freely 
reproducable  goods.  At  any  rate,  if  Perry  regards  these 
instances  as  exceptions  to  his  law,  it  follovvS  that  he 
has  no  law;  for  differences  in  land  respecting  fertility 
and  situation  are  characteristic  of  all  lands.  Differences 
in  fertility  or  situation  of  saleable  land  is  a  matter  of 
degree,  not  of  kind.  There  exists  no  distinct  line  of 
demarcation  separating  lands  in  respect  to  their  fertility 
or  situation  and  placing  them  in  different  value-cate- 
gories. 

Perry,  like  Carey,  classes  land  as  capital.  He  says, 
"The  largest  part  of  all  saleable  land  is  nothing  more  or 
less  than  capital.  Capital  is  some  product  reserved  as 
a  means  to  further  production ;  and  valuable  land  is 
always  a  product  of  labor  and  previous  capital,  and 
is  generally  reserved  for  use  in  future  production,  and 
so  is  capital  under  the  definition."  ~^  He  does  not  hold 
that  all  valuable  land  is  capital,   "but  only  that   large 

»i&.,  283. 


i86  THE    RICARDIAN    RENT    THEORY 

portion  of  it  that  is  worked  or  leased  or  held  with  a  view 
to  an  ultimate  profit."  ^°  He  offers  the  following  exam- 
ples of  capital :  factories  and  business  premises,  lands 
and  buildings  that  are  rented  out,  and  farms  cultivated 
by  their  owners  or  leased  to  tenants.  He  tells  us  that 
the  following  are  not  examples  of  capital :  private  houses 
occupied  by  their  owners  and  lands  kept  for  mere  beauty 
or  convenience.  ^^ 

Thus  he  declares  that  a  farm  is  capital  whether  used 
by  its  owner  or  let  to  a  tenant,  but  a  house  used  by 
its  owner  is  not  capital,  whereas  it  is  capital  when  leased 
to  a  tenant.  Also  lands  held  for  convenience  are  not 
capital.  Then  it  would  seem  that  indirect  agents  are 
capital  only  when  held  for  a  commodity  return.  But 
this  gets  him  into  the  further  difficulty  of  harmonizing 
this  into  his  exchange  economy.  He  says  that  land  leased 
to  another  is  capital;  here  money-rent  is  involved.  This 
involves  the  erroneous  admixture  of  a  usance  with  the 
payment  for  that  usance.  Further,  it  will  be  remembered 
that  Perry  casts  the  word  "wealth"  out  of  his  treatise. 
Now,  if  land  held  for  convenience  is  not  capital,  what 
is  it?  He  says  land  held  for  ultimate  profit  is  capital 
while  that  held  for  convenience  is  not  capital.  Evidently 
land  held  for  convenience  may  earn  a  profit  in  the  form 
of  unearned  increment.  At  one  time.  Perry  classifies 
an  indirect  agent  as  capital  because  of  the  motive  in 
the  mind  of  its  owner;  again  he  makes  his  classification 
on  the  basis  of  a  profit-yield.  Since  Perry  classified 
land  as  capital,  he  would,  unlike  Ricardo,  find  no  dis- 
tinction between  rent  and  interest ;  land  rents  and  inter- 
est on  a  money  loan  would  be  governed  by  the  same 
principles.     Perry's  words  are  : 

30  76. 
»!/&.,  284. 


ARTHUR    L.   PERR^  187 

The  rent  of  leased  la>ids  is  the  measure  of  the  service  which 
the  owner  of  the  land  thereby  renders  to  the  actual  cultivator 
of  it.  ...  As  land  is  capital,  and  as  every  form  of  capital 
may  be  loaned  or  rented,  and  thus  become  fruitful  in  the  hands 
of  another,  .  .  .  the  rent  of  land  does  not  differ  essen- 
tially in  its  nature  from  the  rent  of  buildings  in  cities,  or  from 
the  interest  of  money.  ■*- 

He  emphatically  denies  Ricardo's  claim  that  rent  is 
a  differential  surplus,  that  cost  under  the  most  unfavor- 
able conditions  determines  rent,  and  that  rent  is  a  pay- 
ment for  the  use  of  the  "original  and  indestructible  pow- 
ers of  the  soil,"  for,  says  Perry,  such  powers  do  not 
exist.  ^^     According  to  his  view  : 

The  rent  of  lands  is  a  simple  recompense  for  the  use  of  a 
productive  instrument,  made  such  by  human  efforts. 
Because  the  owner  practices  abstinence  in  the  lessee's  behalf, 
rent  is  substantially  the  same  as  profits.  .  .  .  Whether  till- 
able lands  pay  any  rent  at  all,  and  the  amount  of  rent  that  they 
pay,  always  depends,  so  far  forth  as  commercial  considerations 
control,  on  the  general  or  average  expected  price,  that  is  to  say, 
value,  of  produce.  It  is  not  diversity  of  soils,  nor  the  law  of 
diminishing  return,  that  causes  rent,  since  these  continue  as 
before  when  rent  ceases  to  be  paid ;  but  it  is  the  price  of  produce 
under  demand  and  supply,  that  causes  rent.  ^* 

Perry  is  correct  in  the  assertion  that  the  law  of  dimin- 
ishing returns  (proportionality)  is  still  operative  when 
particular  lands  cease  to  pay  rent ;  but  this  is  far  from 
saying  that  diminishing  returns  do  not  cause  rent.  It 
would  be  a  feeble  analysis  that  would  stop  with  the 
assertion  that  the  price  of  produce  causes  rent.  It  sim- 
ply puts  the  true  answer  a  step  farther  off.  Produce 
would  have  no  price  except  for  its  economic  scarcity, 
that  is,  supply  in  relation  to  demand.  The  cause  of  eco- 
nomic scarcity  is  that  of  the  resistance  to  be  encountered 

32 /b.,  288. 
!»/«>.,  291-2. 
»*/«>.,   292. 


l88  THE    RICARDIAN    RENT    THEORY 

in  production,  or  the  law  of  proportionality.  Were  re- 
sistance absent,  what  of  the  price  problem? 

If  the  "law  of  diminishing  returns"  is  not  a  cause  of 
rent,  what  would  be  its  significance  in  Perry's  analysis? 
He  says,  that  the  portion  of  the  land  that  is  capital  must 
possess  all  the  characteristics  of  capital,  "among  these, 
is  the  ability  to  wear  out."  ^^  His  is  strictly  an  instru- 
mental concept  of  capital;  and  he  discusses  at  some 
length  how  "value  disappears,  and  capital  wears  out."  ^* 

He  goes  on  to  say : 

If  the  bulk  of  land  be  capital,  as  it  is,  then  we  might  expect 
beforehand  to  find  a  law  of  dimuiish'mg  return  from  land,  agri- 
cultural labor  and  skill  remaining  the  same ;  because  all  capital 
is  tools,  and  tools  are  always  wearing  out.  Increase  of  labor 
in  connection  with  any  form  of  capital  unimproved  by  new 
inventions  and  uninvigorated  by  fresh  skill,  though  it  may 
indeed  increase  the  aggregate  return,  cannot,  for  the  reason 
just  given,  secure  an  increase  proportioned  to  the  increase  of 
the  labor."  ^'' 

The  first  sentence  just  quoted  tells  us  that  diminishing 
returns  are  due  to  the  fact  that  capital  wears  out.  In  the 
history  of  economic  thought,  tarious  concepts  are  de- 
nominated the  law  of  diminishing  returns,  but  none  are 
wider  from  the  mark  than  Perry's.  Perry  differs  from 
Ricardo  in  that  his  concept  is  historical  rather  than 
static ;  he  differs  from  Malthus  regarding  the  manner 
in  which  historical  diminishing  returns  are  operative. 
The  fact  that  tools  wear  out,  is  Perry's  central  thought; 
the  central  thought  in  the  argument  of  Malthus  was, 
that,  though  the  land  improves,  yet  a  more  rapid  increase 
in  population  would  cause  a  diminution  per  capita.  This 
statement  also  affirms  that  land  is  subject  to  diminish- 

^  lb.,  284.  This  is  the  first  appearance  of  this  crude  concept  in  this 
study. 

SB  7b.,  284-5. 
^  lb.,  285. 


ARTHUR    L.    PERRY  189 

ing  returns  because  land  is  capital ;  thus  Perry  differs,  it 
seems,  from  the  classical  writers  who  denied  the  appli- 
cation of  this  law  to  capital  goods.  The  second  sentence 
just  quoted,  though  in  opposition  to  the  one  immediately 
preceding  it,  is  a  recognition  of  the  universality  of  this 
law.  It  implies  a  static  concept.  The  quotations  pre- 
sent Perry's  teaching  on  this  point.  From  what  has 
been  said,  it  is  clear  that  it  is  impossible  to  state  pre- 
cisely what  he  means  by  the  expression  "the  law  of 
diminishing  returns."  We  find,  in  his  thought,  the  con- 
cepts of  both  static  and  dynamic  diminishing  returns. 
The  return,  in  his  thought,  is  at  one  time  a  value-return, 
and  at  another  time  he  speaks  of  a  commodity  or  weight- 
and-tale  return.  It  seems  clear  that  the  subtler  meaning 
of  this  law  was  absent  from  Perry's  thought. 

In  his  famous  speech,  "The  Foes  of  the  Farmers,"  to 
the  farmers  of  Nebraska,  Perry  said : 


The  products  of  the  farm  are  constantly  becoming  more  valu- 
able relatively  to  the  products  of  the  factory.  There  are  three 
reasons  for  this :  first,  machinery  can  he  applied  more  com- 
pletely in  manufactures  than  in  agriculture;  second,  division 
of  labor  can  be  carried  further  in  manufactures  than  in'  agri- 
culture;  and,  third,  nothing  can  hasten  the  time  during  which 
the  fruits  of  the  earth  mature,  while  the  processes  of  manufac- 
ture can  all  be  hurried  up.  The  result  is  the  price  of  raw 
material  tends  to  approach  the  price  of  finished  products.  This 
one  law  of  Political  Economy  is  the  physical  law  of  Progress 
for  the  masses.  ^^ 

The  thesis  of  this  address  was  that  the  results  of  the 
law  of  diminishing  returns  are  more  readily  realized  in 
agriculture  than  in  other  pursuits,  and  that  agricultural 
conditions  are,  for  the  three  reasons  given,  comparatively 
more  static.  In  this  speech,  no  denial  is  made  of  the 
general  application  of  this  law,  but  rather  it  is  shown 

^  Perry,  The  Foes  of  the  Fanners,  6. 


190 


THE    RICARDIAN    RENT    THEORY 


how,  through  dynamic  changes,  new  conditions  arise 
more  readily  in  manufactures  than  in  agricuUure.  Thus, 
while  the  general  application  of  proportionality  is  recog- 
nized, our  author  does  not  fail  to  observe  that  the  ulti- 
mate cause  of  scarcity-values  is  the  comparative  resist- 
ance experienced  in  securing  returns  from  dififerent 
factors. 

This  chapter  illustrates  the  danger  of  departing  from 
the  well  trodden  paths  in  the  field  of  economics  unless 
one  is  possessed  of  rare  ability  and  a  comprehensive 
grasp  of  the  subject.  Perry  eliminated  the  word  "wealth" 
and  oflfered  nothing  in  its  place.  He  defined  economics 
in  terms  of  his  fundamental  concept — a  mutual  exchange 
of  service  for  service.  What  of  the  exchange  of  goods 
whose  fabrication  is  a  secret?  or  whose  amount  is  lim- 
ited by  nature?  or  which,  without  labor,  have  grown 
through  time  to  great  value?  or  which  are  controlled  by 
a  monopoly?  Furthermore,  dwellings,  parks,  or  roads 
which  are  not  held  for  exchange  or  for  a  contractual 
return,  do  not  come  under  his  definition  of  value.  They 
are  ruled  out  of  his  economics.  His  treatment  of  land 
as  capital  was  in  keeping  with  the  larger  number  of  the 
economists  under  review.  Although  mistaken  as  to  the 
meaning  of  the  law  of  diminishing  returns,  he  was  cor- 
rect in  maintaining  that  this  law  is  applicable  to  all  forms 
of  productive  agents.  He  made  little  use  of  this  law 
for  the  reason  that  he  did  not  comprehend  its  relation- 
ship to  rent.  The  next  chapter  will  end  the  study  with 
a  resume  of  the  writings  we  have  thus  far  reviewed. 


CHAPTER  X 
RfiSUMfi 

WITH  two  exceptions,  the  early  American 
economists  who  advocated  the  freedom  of 
trade  adhered,  broadly  speaking,  to  the  Ri- 
cardian  theory  of  rent.  Protective  tariff  advocates,  on 
the  contrary,  contested  that  theory.  This  is  not  strange. 
The  tariff  was  a  question  of  absorbing  interest  in  this 
country;  and  the  primary  purpose  of  studying  economics 
was  to  obtain  a  deeper  insight  into  the  tariff.  The  free- 
dom of  trade  was  considered  a  logical  deduction  from 
Ricardo's  theory  of  rent;  and  leading  statesmen,  as  well 
as  the  economists,  based  the  argument  for  the  freedom 
of  trade  upon  the  Ricardian  theory  of  rent. 

WEALTH 

We  have  found  that  these  authors  held  different  and 
conflicting  definitions  of  wealth.  Cardozo  and  the  early 
nationalists  would  not  limit  wealth  to  things  bought  and 
sold.  By  "wealth,"  they  meant  the  productive  "capacity" 
of  a  nation.  The  American  economists  of  the  Classical 
School,  would,  on  the  whole,  limit  wealth  to  privately 
owned  commodities.  Wealth,  according  to  the  Carey 
School,  is  the  power  to  control  the  always  gratuitous 
services  of  nature — the  control  of  man  over  nature. 
Bowen  and  Tucker  would  include  in  their  definitions, 
immaterial  as  well  as  material  products.  Perry  claimed 
it  a  contribution  on  his  part  to  omit  the  word  "wealth" 
from  his  economics. 


192  THE    RICARDIAN    RENT    THEORY 

VALUE 

The  economists  Wayland,  Vethake,  Cooper,  and  the 
others  following  in  the  lead  of  Ricardo,  accounted  for 
value  in  terms  of  cost.  But,  with  hardly  an  exception, 
they,  in  the  body  of  their  writings,  made  the  law  of  sup- 
ply and  demand  (with  emphasis  on  demand)  the  regu- 
lator of  value.  Vethake,  Newman,  Bascom,  and  even 
Bowen  made  the  value  of  a  good,  in  harmony  with 
Adam  Smith,  depend  upon  either  the  amount  of  labor 
for  which  it  could  be  exchanged  or  that  went  to  pro- 
duce it.  The  Carey  School  held  a  cost-of- reproduction 
theory  of  value.  George  Tucker  and  Willard  Phillips 
were  surely  the  ablest  exponents  of  the  opinions  held 
by  the  majority  of  the  early  American  economists.  They 
argued  against  the  labor-cost  theory  of  value,  and  lim- 
ited value  to  things,  material  or  immaterial,  subject  to 
purchase  and  sale.  They  held  persistently  to  the  view 
that  value  is  subjective  and  individualistic.  This  view 
was  carried  to  its  logical  conclusion  in  maintaining  that 
a  commodity  need  not  necessarily  have  utility  in  order 
that  we  attach  value  to  it.  Whether  utilities  be  real 
or  imaginary,  it  is  enough  that  we  think  commodities 
have  utilities  for  us  to  attach  value  to  them.  Phillips 
thinks  that  the  desire  to  obtain  any  particular  thing 
gives  it  its  value,  and  the  motives  of  such  desires  are 
as  various  and  numerous  as  the  appetites,  tastes,  pas- 
sions, wants,  and  caprices  of  mankind.  As  value  is  cre- 
ated by  this  desire,  so  it  is  limited  by  its  strength  and 
intensity.  Tucker  argues  that  value,  in  its  largest  sense, 
means  the  feeling  with  which  we  regard  whatever  can 
render  us  benefit,  or  afford  us  gratification.  In  this 
sense,  it  is  an  emotion  of  our  minds  comprehending  all 
that  can  impart  pleasure  to  our  senses,  our  tastes,  our 


RfiSUMfi  193 

desires :  as  health,  talents,  friendships,  reputation,  land, 
money,  and  goods.  It  varies  according  to  the  endless 
diversities  of  objects,  and  of  human  tastes  or  opinions, 
and  it  is  susceptible  of  all  degrees  of  intensity,  from  a 
simple  wish  to  the  most  passionate  desire. 

CAPITAL 

With  few  exceptions,  we  have  found  capital  defined  as 
privately  owned  means  of  production.  The  value  rather 
than  the  technological  concept  has  been  emphasized.  The 
value-aspect  of  capital  has  been  accounted  for  in  two 
ways :  the  scarcity  of  capital  goods,  and  the  earning 
power  of  such  goods.  The  scarcity  of  capital  has  been 
accounted  for  by :  scarcity  of  peculiar  skill,  secret  pro- 
cesses, legal  rights,  the  natural  desire  for  present  con- 
sumption, and  the  large  cost  required  to  produce  some 
kinds  of  capital  goods.  These  limiting  agencies,  it  will 
be  seen,  form  the  basis  for  the  quasi-rent  doctrine  which 
of  late  has  come  to  the  fore.  In  a  number  of  instances, 
notably  in  Tucker's  writings,  the  quasi-rent  idea,  though 
discussed  under  the  terminology  of  profits,  finds  clear 
treatment.  The  writers,  on  the  whole,  think  of  the 
value  of  capital  in  terms  of  earning  power.  And,  limit- 
ing the  supply  of  land  to  improved  land,  it  is  notable 
that  from  Raymond  to  Perry  inclusive,  land  has  been 
regarded  as  one  of  the  forms  of  capital.  The  reason 
for  this  view  is  to  be  found  in  the  environment  of  the 
writers.  In  America  were  lacking  the  customs  and  ideas 
as  to  the  capitalist  and  the  landholding  classes,  originat- 
ing in  the  contrast  between  town  life  and  country  life 
in  the  Middle  Ages.  Here  the  lands  were  subject  to 
frequent  purchase  and  sale,  farms  were  hewn  out  of 
the  forest,  free  lands  were  converted  into  valuable  pos- 


194 


THE    RICARDIAN    RENT    THEORY 


sessions  through  internal  improvements  and  the  arts  of 
husbandry,  and  changes  relative  to  the  market  and  varia- 
tions in  yield  were  due  to  human  agency. 

POPULATION 

At  the  very  outset,  the  student  of  early  American  eco- 
nomics must  appreciate  the  mal-adjustment  of  means  to 
ends  which  then  existed  in  this  country  for  the  pro- 
duction of  wealth.  To  utilize  the  abundance  of  natural 
resources,  labor  and  capital  were  in  great  demand.  There 
were  economic  reasons  for  the  wanton  earth-butchery 
which  characterized  this  period.  A  limitless  breadth  of 
arable  land  and  a  meager  supply  of  labor  and  accumu- 
lated capital,  were  conditions  that  made  land  almost  a 
free  good  and  gave  to  labor  a  disproportionate  value. 
Not  the  preservation  of  natural  resources,  but  the  best 
utilization  of  labor  and  capital,  is  the  dictate  of  wisdom 
under  such  circumstances. 

The  theories  of  population  held  by  our  economists 
were  also  in  keeping  with  their  environment.  These 
theories  may  be  grouped  under  the  following  titles : 

(i)  The  theory  that  faulty  distribution  is  the  origin 
of  poverty. 

(2)  The  theological  theory. 

(3)  The  theory  of  the  adjustment  of  productive 
factors. 

The  prevailing  opinion  was  that  poverty  is  due  not 
to  the  niggardliness  of  nature  but  to  faulty  distribution. 
In  1847,  the  "fate  of  the  Irish  and  Scotch  appeared  the 
more  terrible  because  they  starved  in  the  midst  of 
plenty."  Raymond  summarizes  the  prevailing  opinion  in 
these  words :  "It  matters  not  how  abundant  food  may 
be;  if  it  all  belongs  to  a  small  portion  of  the  nation. 


R£SUM£  195 

and  the  rest  of  the  nation  has  nothing  to  buy  it  with, 
a  larger  portion  will  be  left  to  starve,  unless  some  pro- 
vision is  made  by  law  for  the  distribution  of  it  among 
the  poor."  It  was  by  this  defect  and  not  by  the  niggard- 
liness of  nature  that  these  economists  accounted  for  the 
poverty  of  England.  They  insisted  that  population  is 
not  supported  on  the  soil  it  occupies.  A  civilized  society 
is  so  constructed  that  this  could  not  be.  This  principle 
was  used  to  support  the  argument  for  a  territorial  divi- 
sion of  labor,  to  deny  the  idea  of  the  niggardliness  of 
nature,  and  to  support  the  advocacy  of  a  large  popula- 
tion to  subdue  the  land  and  utilize  its  resources. 

The  theological  theory  is  a  conspicuous  element  of 
American  economic  thought.  Contrary  to  Malthus,  those 
holding  this  theory  repeat  the  command  to  replenish 
the  earth.  Divine  relationships,  exemplified  in  physical 
and  social  laws,  necessitate  the  division  of  labor  and  ex- 
changes. Perry,  Cardozo,  Bowen,  and  others  seem  to 
work  out  their  theories  of  value  on  the  proposition  that 
"God  is  a  giver  and  not  a  seller,"  and  that,  therefore, 
value  originates  not  in  what  God  has  done  but  in  what 
man  has  done.  Procreation  is  governed  by  divine  laws. 
The  Author  of  the  positive  forces  is  also  the  Author 
of  the  negative  forces;  therefore  numbers  will  be  har- 
moniously adjusted  to  the  resources  of  the  earth,  and 
man  need  not  interpose  his  agency.  Gk»d  in  his  all- 
goodness  will  provide  for  the  race,  and  will  originate 
no  laws  forcing  us  to  starve,  as  Malthus  claims.  If 
barbarian  tribes  waste  away  for  want  of  food,  this  is 
but  a  beneficent  arrangement  of  Providence  whereby 
civilized  peoples  shall  occupy  the  farthest  corners  of  the 
earth. 

The  ideal  of  a  proper  adjustment  of  productive  factors 
became  an  argument  for  a  larger  population  in  America. 


196  THE    RICARDIAN    RENT    THEORY 

Preaching  the  doctrine  of  historical  increasing  returns 
rather  than    historical    diminishing    returns,    American 
economists  felt  the  necessity  for  a  large  population  in 
order  to  utilize  the  world's  natural  resources.     Popula- 
tion is  a  cause  of  abundance  rather  than  of  scarcity. 
The  division  of   labor  with   the   consequent   influences 
of  invention  and  skill  result   from   a  large  population 
and  increase  with  the  growth  of  numbers.     Following 
in  the  lead  of  this  dynamic  progression,  it  is  found  that 
man's  desires  mount  with  every  additional  opportunity 
for  gratification.    The  growth  of  desires  in  the  direction 
of  great  variety  and  superior  quality  of  products  neces- 
sarily brings    into    utilization    still    further    productive 
energy.     But  what  is  the  limit  of  this  dynamic  progres- 
sion?    It  will  cease  when  the  population  factor  of  pro- 
duction becomes  proportionately  as  great  as  are  the  other 
factors  of  production.     Bowen  taught  that,  in  sparsely 
settled  regions,  children  are  a  blessing  to  parents  and 
not  a  burden,  but  that,  with  the  increase  of  numbers, 
the  birth  rate  will  decline.    Tucker  proved  by  the  statis- 
tical method  that  the  density  and  the  rate  of  increase 
of  population  vary  in  inverse  ratios.     When  the  earth 
is  duly  populated,  numbers  will  remain  stationary.    Car- 
dozo,  Wayland,  Phillips,  and  Walker  believed  that  pop- 
ulation  always    adjusts   itself   to   the   existing  state   of 
industrial  development.     The   Carey   School,   following 
in  the  lead  of  Herbert  Spencer,  maintained  that  man's 
cerebral  and  reproductive  functions  became  antagonistic 
through  development.     Over-population  will  be  avoided 
because  the  power  to  maintain  life  varies  inversely  with 
the  power  to  propagate  the  species.     The  conclusion  of 
these  teachings  is,  that  the  forces  destructive  of  popula- 
tion and  the  forces  preservative  of  it  tend  toward  equili- 


RfiSUMfi  197 

brium.    The  ultimate  check  of  population  is  a  harmoni- 
ous adjustment  of  all  the  factors  of  production. 

The  phrase  "population  problem"  has  been  employed 
in  a  number  of  different  senses.  It  has  been  used  to 
signify  the  relationship  between  the  birth  rate  and  the 
death  rate,  increasing  density,  poverty,  the  mal-distribu- 
tion  of  numbers  over  the  earth  or  in  the  different  fields 
of  employment,  a  faulty  distribution  of  wealth,  and 
problems  caused  from  immigration.  From  different  defi- 
nitions, unlike  conclusions  may  be  logically  advanced.  To 
advance  one  line  of  argument  is  not  always  to  deny 
the  correctness  of  another  line  of  reasoning.  The  essen- 
tial thought  of  Malthusianism  was  not  necessarily  denied 
by  our  economists  who  preached  that  increasing  numbers 
meant  increasing  prosperity  under  the  then  existing  con- 
ditions in  America.  Because  land  was  the  short  factor 
in  England  and  population  the  short  factor  in  America, 
it  might  well  follow  that  what  would  be  a  truth  in  Eng- 
land would  be  an  untruth  in  America.  In  both  countries, 
however,  the  problem  was  one  of  adjusting  the  popula- 
tion to  economic  environment. 

RENT 

Ricardo's  doctrine  of  rent  was  thought  by  American 
writers  to  be  inapplicable  to  this  country.  They  claimed 
that  this  theory  was  invented  to  suit  the  conditions  of 
England.  It  could  not  hold  in  the  United  States  because 
we  had  no  distinct  class  supported  by  w^ages,  and  be- 
cause a  growth  of  population  here  caused  increasing 
returns  and  lower  prices. 

It  is  worth  whfle  to  review  a  few  of  the  criticisms 
made  by  American  writers  upon  Ricardo's  rent-doctrine. 
The  origin  of  rent  is  not  found  in  the  different  qualities 


198  THE    RICARDIAN    RENT    THEORY 

of  soil  but  in  the  scarcity  of  soil  suited  to  different  kinds 
of  crops.  All  lands  under  cultivation  pay  a  rent  because 
they  are  valuable.  There  are  no  original  and  indestructi- 
ble qualities  of  the  soil.  Like  machinery,  agricultural 
lands  are  products  of  labor.  Society  is  so  organized 
that  one  industry  aids  other  industries;  therefore  the 
interests  of  classes  are  not  antagonistic  in  nature. 
Ricardo's  theory  is  a  fallacy  of  inversion :  the  poorest 
land  brought  under  cultivation  does  not  determine  price, 
but  price  determines  the  poorest  land  that  will  be  brought 
under  cultivation.  The  order  of  cultivation  is  from  poor 
land  to  rich  and  not  from  rich  to  poor  as  Ricardo 
teaches.  Demands  for  produce  increase  more  rapidly 
than  do  improvements  in  husbandry;  therefore  improve- 
ments augment,  rather  than  lower  rent.  American  econ- 
omists for  the  most  part  abandoned  the  threefold  classi- 
fication of  productive  factors.  Land  was  considered  a 
form  of  capital.  They  had  varying  definitions  of  capital, 
yet  the  value  of  land  and  its  uses  were  treated  by  the 
same  principles  that  regulate  the  value  of  artificial  agents 
and  their  uses. 

The  prevailing  view  of  American  economists  was  that 
rent  is  governed  by  the  law  of  supply  and  demand.  The 
price  paid  for  the  services  of  land  is  determined  by 
the  same  principles  that  fix  the  market  prices  of  goods. 
There  was  a  great  difference  between  Ricardo  and  his 
American  critics  in  their  analyses  of  rent-determining 
forces.  Ricardo  reasoned  as  if  men  were  equal  and  as 
if  they  were  creatures  of  circumstances.  Our  economists 
recognized  variations  in  the  efficiency  of  competitors, 
and  reasoned  that  environment  is  largely  a  human  crea- 
tion. Ricardo's  formula  was  based  on  the  idea  that 
rent  is  determined  and  measured  by  natural  laws.  Em- 
phasizing the   human   agency,    some   American   writers 


R£SUM£  199 

spoke  of  agricultural  returns  as  products  of  labor,  and 
argued  that  contract  rent  results,  as  other  market  prices, 
from  competition  among  men  of  unequal  strength,  A 
number  of  these  writers,  Cooper  in  particular,  so  empha- 
sized differences  in  men  as  clearly  to  suggest  Walker's 
differential  theory  of  profits. 

Accurate  terminology  and  clear  thinking  made  it  a 
matter  of  significance  whether  rent  is  defined  as  a  net 
return  or  defined  as  a  price  paid  for  the  use  of  indirect 
agents.  These  concepts  obey  different  principles.  Net 
returns  to  the  farmer  who  tills  his  own  soil  is  usance 
and  not  rent.  The  price  paid  for  the  use  of  land  is  rent. 
The  one  is  legal  or  contractual  in  nature  and  does  not 
vary  during  the  contract  period ;  the  other  is  a  problem 
in  production  involving  the  risks  of  seasons,  pests,  labor 
conditions,  distributive  costs,  and  market  prices.  Ameri- 
can economists  overlooked  this  distinction  although  the 
weight  of  their  emphasis  was  on  the  idea  that  rent  is  a 
contract  payment. 

Their  distinction  between  rent  and  interest  was  only 
in  name.  Prices  paid  for  the  use  of  land  and  prices 
paid  for  the  use  of  capital  are  fixed  by  the  same  laws. 
Many  of  these  authors  spoke  of  rent  as  a  per  cent,  and 
reasoned  that  the  value  of  land  is  determined  through 
the  price  of  its  yield.  Adhering  to  the  principle  of  com- 
petition, they  argued  that  the  price  of  land  as  determined 
by  the  value  of  its  rental  could  be  measured  by  the 
cost  of  reproduction.  The  Carey  School  makes  the 
cost  of  reproduction  a  measure  and  not  a  cause  of  value. 

On  the  whole,  the  early  American  economists  pre- 
sented the  problem  of  returns  from  the  dynamic  point 
of  view.  They  did  not  reason  with  respect  to  the  returns 
of  a  limited  area  at  a  given  stage  of  industrial  develop- 
ment.    They  surveyed  the  whole  industry  over  a  long 


200  THE    RICARDIAN    RENT    THEORY 

period  of  time.  Changes  through  time  such  as  develop- 
ments in  the  arts  and  in  science,  substitutions,  superior 
organizations,  and  the  hke,  form  a  basis  of  reasoning 
entirely  different  from  the  static  situation  usually  as- 
sumed by  Ricardo.  History  substantiates  the  truth  of 
their  contention  that  the  principle  of  historical  increas- 
ing returns  is  applicable  both  to  agriculture  and  to  manu- 
facturing. To  affirm  dynamic  increasing  returns  is  in 
no  sense  to  deny  static  diminishing  returns  (proportion- 
ality). We  have  seen  that  the  method  of  reasoning  used 
by  our  economists  took  for  granted  and  affirmed  the 
static  law  in  the  sense  in  w^hich  Ricardo  mainly  used  it. 

To  avoid  reading  new  trains  of  thought  into  these 
writings,  I  shall  assume  responsibility  for  the  following 
remarks  although  their  substance  is  deduced  from  the 
preceding  pages.  Many  of  these  writings  contain  by 
implication  the  principle  that  the  supply  of  land  is  meas- 
ured in  yield  rather  than  in  area.  An  acre  yielding  loo 
is  as  great  a  part  of  the  land-supply  as  are  ten  acres 
whose  total  yield  is  loo.  The  land-power  to  do  the 
land-work  is  the  siipply  of  land  just  as  the  money-power 
to  do  the  money-work  is  the  supply  of  money.  The 
land-supply  is  increased  by  new  discovery  of  land,  by 
the  better  utilization  of  land,  by  the  increase  of  trans- 
portation facilities  that  make  new  lands  available,  by 
scientific  methods,  or  the  substitution  of  rich  for  poor 
lands,  by  intensive  or  extensive  utilization,  or  by  any 
means  which  convert  potential  into  effective  uses.  Clear 
thinking  demands  that  we  distinguish  between  "the 
amount  of  land"  and  the  "supply  of  land." 

Whether  on  old  or  on  new  lands,  additional  uses  resist 
being  harnessed.  Resistance  must  be  overcome  in  the 
obtaining  of  additional  uses  from  any  productive  agent. 


R£SUM£  201 

The  principle  of  resistance  is  universal  in  the  field  of 
production.  Numerous  indirect  agents  must  work  to- 
gether to  produce  wealth.  Now  that  all  agents  are  sub- 
ject to  resistance,  it  follows  that  there  are  no  definitely 
fixed  and  limited  factors  of  production.  In  other  words, 
the  productivity  of  any  factor  varies  as  the  other  coop- 
erating factors  with  it  are  varied.  The  adjustment  of 
various  factors  to  each  other  in  a  productive  enterprise 
must  be  worked  out  upon  the  general  principle  of  resist- 
ance. 

The  dynamic  problem  which  these  economists  con- 
ceived was  one  of  progress,  one  in  which  the  law  of 
substitution  was  ever  present.  Properly  to  adjust  factors 
to  one  another  and  to  adjust  the  whole  establishment 
to  the  extent  of  the  market  are  problems  inseparable 
from  the  principle  of  substitution.  The  cause  of  sub- 
stitution is  the  elastic  limit  of  the  productivity  of  an 
agent,  the  increasing  resistance  encountered  in  augment- 
ing the  returns  from  a  factor.  The  basis  of  the  idea 
of  substitution  which  pervades  the  writings  of  the  Amer- 
ican economists  under  review,  is  the  principle  of  pro- 
portionality. No  economist  reviewed  has  denied  "the 
law  of  diminishing  returns"  in  the  sense  in  which 
Ricardo  conceived  this  law.  Those  critics  who  have 
given  a  contrary  impression  have,  without  realizing  it, 
made  the  common  shift  from  static  conditions  on  a  lim- 
ited area  to  dynamic  conditions  covering  the  whole 
industry  over  a  long  period  of  time. 


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Penn  Monthly  Magazine.     Philadelphia,  October  1870, 

Political  Science  Quarterly,  V.     New  York,  1890. 

American  Philosophical  Society  Proceedings,  XXIX.  Phila- 
delphia. 

Publications  of  the  American  Economic  Association,  ist  series, 
III,  IV,  VIII ;  3rd  series,  II,  III,  V,  X,  XI. 

Southern   Historical    Society   Publications,   II.     Washington. 

Quarterly  Journal  of  Economics,  I,  V,  VII,  XV,  XVI,  XXVI. 
Cambridge. 

Richmond  Enquirer,  Richmond,  July  i,  August  26,  30,  Sept.  6, 
9,  Oct.  13,  Dec.  6  of  182',. 

Southern  Review,   I,  VI,  VIII.     Charleston,   S.   C. 

Stoddard's  American  Supplement  to  Encyclopaedia  Britannica, 
I.     New  York,  1883. 

Twelfth  Census  of  the  United  States,  I,  III. 

Twentieth  Century  Biographical  Dictionary  of  Notable  Ameri- 
cans.    Boston,  1904. 

Yale  Review,  VI,  VII.    New  Haven. 


INDEX 


INDEX 


American  economists :  environ- 
ment of,  4,  5,  1 10-113;  view- 
point of,  4. 

American  political  economy : 
Bowen's  defense  of  title, 
145-146. 

Author's  preface,  xv-xvi. 

Bascom,  John :  chap,  viii ;  bio- 
graphical sketch,  159-160; 
differences  in  soil  a  measure 
of  rent,  163;  diminishing  re- 
turns, 164 ;  economics  de- 
fined, 160;  margins  (exten- 
sive and  intensive)  equal, 
164;  Malthusianism  favored, 
160-161 ;  population,  sum- 
mary of  theory,  161 ;  Ricar- 
dian  rent  rarely  true,  162; 
rent  defined,  162-163,  its  ori- 
gin, 163,  price  determined, 
162-163,  reasoning  on,  162. 

Bibliography,  203-212. 

Bowen,  Francis  :  chap,  vii ;  bio- 
graphical sketch,  143-14S; 
children  an  asset  in  new- 
settlement,  154;  criticism  of 
Ricardo's  theory  as  appli- 
cable only  to  England,  155- 
156;  diminishing  returns, 
156;  home  market  argument, 
157;  men,  interdependence 
of,  147;  laisses  faire,  con- 
cept of,  146-147;  Malthus 
criticized  for  fallacy  of  in- 
version, 153;  Malthus'  the- 
ory applicable  to  vegetable 
and  animal  worlds,  150; 
national  economist,  to  be 
classified  as,  145 ;  no  rent  if 
population  adequately  dis- 
tributed, 156-157;  opposes 
Ricardo  on  rent,  156;  popu- 


lation, a  giving  away  of  bar- 
barous to  civilized  peoples, 
151,  limited  by  distribution 
of  food,  152-153,  need  of 
larger,  149-155,  not  supported 
from  soil  it  occupies,  152,  of 
Belgium  cited,  150-151,  the- 
ory of  summarized,  154-155; 
protective  tariff  desired,  148- 
157;  quoted  on  wealth,  op- 
posing Mill,  148-149;  rent  a 
benefit  to  all  classes,  157; 
value  depends  on  utility  and 
labor  cost,  148;  wealth  em- 
bodies immaterial  products, 
148-149. 

Burgess,  J.  W. :  estimate  of 
Thomas  Cooper,  53,  56-57- 

Cannan,  Edwin :  differential 
concept  extended,  14;  envi- 
ronment of  Ricardo's 
thought,  3-4. 

Capital:  defined  by  Carey,  119, 
120,  by  Ricardo,  7,  by  Tuck- 
er, 93 ;  demand  for  (Tuck- 
er), 94;  embraces  land  (Ca- 
rey), 118-119;  (Perry),  185- 
187;  (Walker,  A.),  174; 
instrumental  concept  of,  38; 
results  from  saving,  93; 
resume  of  authors,  193-194; 
returns  of  uniform,  8;  sup- 
ply of  (Tucker),  94;  value 
concept  of,  38. 

Cardozo,  J.  N. :  chap,  iv ;  bio- 
graphical sketch,  75,  75-76  n ; 
Malthusianism  opposed,  77 ; 
no-rent  land  idea  opposed, 
78;  Ricardian  rent  opposed, 
77-79;  rent,  quotation  on,  79, 
regarded  as  profit  on  capital, 
80. 


2l6 


THE    RICARDIAN    RENT    THEORY 


Carey,  H.  C. :  chap,  vi ;  bio- 
graphical sketch ,  110-115; 
American  conditions,  influ- 
ence on,  110-112;  Carey  and 
Ricardo,  their  theories  con- 
trasted, 126-128;  capital  de- 
fined, 119;  confirms  dimin- 
ishing returns  in  Ricardian 
sense,  141 ;  contrasted  with 
Ricardo  on  diminishing  re- 
turns, 139;  cultivation,  order 
of  from  poor  to  rich  soil, 
125-126;  diminishing  returns, 
his  theory  interpreted,  128- 
132;  land  is  capital,  118-119; 
opposes  Malthus,  116;  popu- 
lation self-regulative,  117, 
ultimate  check  to,  117- 118, 
will  displace  animals,  116- 
117;  rent,  criticism  of  Ri- 
cardo on,  123-124,  grows  less 
as  cost  of  reproduction  les- 
sens, 121-122;  utility  defined, 
119;  value  defined,  120,  labor- 
cost  of  reproduction  of,  120; 
wealth  defined,   119. 

Carey,  Mathew :  would  endow 
chair  in  University  of  Mary- 
land  for  Raymond,  24  n. 

Clark,  J.  B. :  differential  con- 
cept extended,  14. 

Checks  to  population  (Ve- 
thake),  69. 

Colton,  Calvin :  biographical 
sketch,  47 ;  protective  tariff 
defended,  48. 

Contents,  xvii-xix. 

Cooper,  Thomas :  chap,  iii ; 
biographical  sketch,  53-56 ; 
defends  Malthusianism,  53 ; 
defends  Ricardian  rent,  53; 
favored  nullification  in  South 
Carolina,  53 ;  population  the- 
ory, 58;  rent,  a  defender  of 
Ricardian  theory,  59. 

Cultivation,  from  poor  land  to 
rich   (Carey),  125-126. 


Differential  profits,  14;  Tuck- 
er's view  on,  95. 

Differential:  applicable  only  to 
land,  13-14;  concept  extend- 
ed,  14. 

Diminishing  returns :  applica- 
ble to  capital,  15;  Cannan's 
error  as  to  Malthus'  use  of, 
14;  Carey  and  Ricardo  con- 
trasted on,  139;  interpreta- 
tions of  Carey  on,  128-132; 
Malthus'  use  of,  14;  Perry's 
mistaken  concept  of,  188- 
190;  Ricardo's  theory  not 
denied  by  Carey,  140-141 ; 
Ricardo's  treatment  of,  14; 
static  and  dynamic,  differ- 
ent species,  139;  static  in 
agriculture,  dynamic  in  ma- 
chinery (Bascom),  164-165; 
Tucker's  view  on,  104 ;  value 
related  to,  14;  Vethake's 
view  of,  72,  81,  82. 

Dunbar,  C.  F. :  classifies  Phil- 
lips erroneously,  39-40  n; 
estimate  of  Wayland's  eco- 
nomics, 61 ;  quoted  on  Bow- 
en,   144. 

Earth,  the  source  of  wealth,  26. 

Economics :  defined  by  Bas- 
com, 160,  by  Perry,  181,  185 ; 
little  written  on,  the  decade 
previous  to  the  Civil  War, 
144;  neglected  by  American 
colleges,  5 ;  treated  as  an  art, 
14S-146. 

Elder,  Wm.:  estimate  of  Ca- 
rey,  113-114,   115- 

England :  poverty  of  due  to 
faulty  distribution,  25. 

English  economists :  environ- 
ment of,  5. 

Everett,  A.  H. :  chap,  ii ;  bio- 
graphical sketch,  31,  31-32  n; 
criticism  of  Malthusianism, 
32-33 ;  ratios  of  food  and 
population,  33-34. 


INDEX 


217 


Fetter,  F.  A.:  differential  con- 
cept extended,  14;  introduc- 
tion, vii-xiv. 

Franklin,  Benjamin:  influence 
on  Phillips,  44. 

God's  gift  of  land  never  valu- 
able   (Perry),   183. 

Gray,  S. :  larger  population  de- 
sired, 38-39- 

Hobson,  J.  A. :  differential  con- 
cept extended,  14. 

Interdependence  of  men  (Bow- 
en),   147. 

Introduction  by  Fetter,  F.  A., 
vii-xiv. 

Labor :  a  measure  not  a  cause 
of  value,  89;  by  slaves  must 
disappear  (Tucker),  93;  defi- 
nition of,  7;  the  cause  of  all 
wealth,  27. 

Laisses  faire,  Bowen's  concept 
of,  146-147. 

Land:  as  capital,  1 18-119;  cap- 
italized according  to  rate  of 
profits  (Tucker),  93-94;  defi- 
nition of,  7;  inequalities  a 
measure  not  a  cause  of  rent, 
13;  is  capital  (Wayland),  62. 

Land-supply  concept,  130,  133, 
134- 

Lauderdale,  Lord :  cited,  36. 

Law  of  proportionality,   10-12. 

Leslie,  T.  E. :  estimate  of  Ca- 
rey,  114. 

Limited  returns :  a  static  con- 
cept, 106;  and  habit  of  con- 
sumption, 106-107;  Patten's 
idea  of,  105;  Tucker's  idea 
of,  104-105 ;  Wayland's  idea 
of,  66. 

Livermore,  C.  H. :  quoted  on 
Carey,   115. 

Machinery:  its  effect  on  rent, 
30. 

McVickar,  John  :  chap,  iii ;  bio- 
graphical sketch,  51 ;  edited 
McCullock's  encyclopedic  ar- 
ticle, 52;  margin  price-deter- 


mined,  52;    rent  no  part  of 
cost,  52. 
Mal-adjustment  of  factors:  in 
England  and  United  States, 

Maltho  -  Ricardian  theory: 
American  writers,  regard 
for,  4. 

Malthus :  criticized  by  Tucker, 
88-89. 

Malthus,  T.  R. :  criticized,  by 
Gray  and  Phillips,  38-39,  by 
Raymond,  24 ;  fallacy  of  in- 
version (Bowen),  153;  op- 
posed by  Carey,  116;  rent, 
defined  as  national  wealth, 
17,  theory  of,  99  n. 

Malthusianism :  a  "libel  on 
Providence,"  (Colton),  48; 
favored  by  Bascom,  160-161; 
opposed  by  Cardozo,  77,  by 
Walker,  A.,  170-172;  theory 
applicable  to  vegetables  and 
animals  (Bowen),  150;  why 
popular,  26. 

Margin :  lowering  of,  means 
fall  in  wages  (Tucker),  91; 
price-determined,  13,  162- 
163 ;  equality  of  extensive 
and  intensive  (Bascom),  164. 

Marshall,  Alfred :  quoted  on 
American  conditions,  112. 

Newman,  S.  P. :  chap,  iii ;  bio- 
graphical sketch,  59;  popu- 
lation, 59;  rent,  a  part  o£ 
cost,  60,  defined,  60. 

No  American  rent  problem 
(Colton),  48. 

No-rent  land  idea  opposed 
(Vethake),  78. 

No-rent  margin  extended,  10. 

Patten,  S.  N. :  limited  returns, 
105. 

Perry,  A.  L. :  chap,  ix ;  bio- 
graphical sketch,  179-181; 
capital  embraces  land,  185- 
187 ;  cost  -  of  -  reproduction 
theory    of    value    contrasted 


2l8 


THE    RICARDIAN    RENT    THEORY 


with  Carey's  idea,  185 ;  di- 
minishing returns,  mistaken 
views  on,  188-190;  econom- 
ics defined,  181,  185;  God's 
gift  of  land  never  valuable, 
183 ;  indebted  to  Bastiat,  180- 
181 ;  population  theory  sum- 
marized, 182-183 ;  Ricardo's 
differential  rent  denied,  187; 
value  defined,  181-182,  of 
land  determined  by  cost  of 
reproduction,  184 ;  wealth 
omitted  from  book,  181. 

Phillips,  Willard :  chap,  ii ;  bio- 
graphical sketch,  35,  35-36  n; 
a  national  economist,  36; 
capital  defined,  38;  criticizes 
Malthus,  38-39;  tariff,  fa- 
vored, 38;  value  subjective, 
37- 

Population :  a  statistical  theory 
(Tucker),  87-88;  barbarians 
supplanted  by  civilized  peo- 
ple, 151 ;  Bowen's  theory  of, 
summarized,  154-155;  chil- 
dren in  new  settlement  an 
asset  (Bowen),  154;  Coop- 
er's view  on,  57-58;  depends 
on  capital,  62;  desire  of  in- 
crease in,  30;  example  of 
Belgium  cited  on  (Bowen), 
150-151 ;  increases  with  im- 
provement in  husbandry 
(Tucker),  90;  limited  by 
distribution  of  rather  than 
amount  of  food,  152-153; 
need  of  augmenting,  32-34; 
need  of  larger,  149-155; 
Newman  on,  59 ;  no-land- 
rent  if  properly  distributed 
(Bowen),  156-157;  not  sup- 
ported on  soil  it  occupies 
(Bowen),  152;  regulated  by 
wages  (Vethake),  68;  rent 
problem  "our  heritage  of 
woe"  (Bowen),  155;  resume 
of  authors  on,  194-197;  self- 
regulative       (Carey),       117; 


summary  of  Bascom's  the- 
ory, 161 ;  theory  of  Perry 
summarized,  182-183;  ulti- 
mate check  to  (Carey),  117- 
118;  varies  inversely  as  dens- 
ity (Tucker),  88;  views  of 
Ware,  N.  A.,  45-50 ;  will  dis- 
place animals,  116-I17. 

Poverty  in  England  a  result  of 
faulty  distribution  (Walker, 
A.),  171-172. 

Price :  determined  by  cost,  9. 

Price-determined  margin,  52. 

Productive  agent,  nature  of, 
10-12. 

Productive  factors,  their  sup- 
ply elastic,  138;  valueless 
apart  from  one  another,  10- 
12. 

Profits :  criticism  of  Ricardo 
on  (Tucker),  95-96;  Tucker's 
three  ideas  of,  96. 

Proportionality:  135-139;  a 
physical  law,  11-12;  Bas- 
com's idea,  164;  Bowen's 
idea,  156. 

Protective  tariff :  advocated  by 
Bowen,  148-157. 

Quasi-rent  (Tucker),  94. 

Rae,  John:  criticism  of  Mal- 
thus, 47. 

Raymond,  Daniel :  chap,  ii ; 
biographical  sketch,  22,  22- 
23  n ;  classified  land  as  cap- 
ital, 29;  earth  the  source  of 
wealth,  26;  labor  the  cause 
of  all  wealth,  27 ;  machinery, 
effect  on  rent,  30;  Malthus 
criticized,  25 ;  population  de- 
sires increase  in,  30;  pro- 
ductive capacity,  23 ;  produc- 
tive factors,  26;  rent  and 
interest  governed  by  same 
laws,  29;  rent  and  prices 
governed  by  same  laws,  28- 
29;  rent  defined,  28;  scope 
of  Political  Economy,  24; 
strong     central     government 


INDEX 


219 


favored,  24;  tariff  his  chief 
interest,  23 ;  wages  governed 
by  supply  and  demand,  27. 

Real-wages  fall  when  corn 
rises   (Tucker),  91-92. 

Rent :  a  benefit  to  all  classes 
(Bowen),  157;  a  monopoly 
return,  18;  and  interest  gov- 
erned by  same  laws,  29;  and 
prices  governed  by  same 
laws,  28-29;  a  product  of 
fixed  capital  (Walker,  A.), 
174;  and  profits  obej'  same 
laws  (Tucker),  94;  Carey's 
criticism  of  Ricardo  on,  123- 
124;  commodity-rent,  16; 
conflicting  definitions  of  by 
Ricardo,  20;  confused  con- 
cept of  (Vethake),  ']2; 
Cooper's  views  on,  59;  de- 
fined by  Bascom,  162-163, 
by  Newman,  60,  by  Phillips, 
40,  by  Raymond,  28,  by  Ve- 
thake, 71,  by  Walker,  A.,  173; 
differences  in  soil  a  measure 
of  (Bascom),  163;  enters 
into  cost,  10-12;  enters  into 
price  (W^ayland),  62;  equiv- 
alent to  profits  on  capital 
(Perry),  187;  forces  equal- 
izing (Phillips),  42;  four 
elements  of  (Walker,  A.), 
175-176;  grows  less  with  im- 
provement (Carey),  121-122; 
increased  by  land  improve- 
ment (Tucker),  100;  its 
origin  (Bascom),  163;  no 
part  of  cost,  8,  52,  72;  not 
dependent  on  differential 
(Senior),  103-104;  not  ele- 
ment in  cost  demonstrated, 
8-9;  regarded  as  profits  on 
capital,  80;  resume  of  au- 
thors, 197-201 ;  Ricardo's 
definition  of,  16;  Ricardo's 
theory  criticized  by  Tucker, 
102-104;  theories  of  Ricardo 
and    Phillips    contrasted    on, 


41-44;  the  product  of  nat- 
ural agents  (Bascom),  162; 
uniform  under  competition, 
13 ;  views  on  summarized  by 
Walker,  A.,   175. 

Resume  of  authors,  chap.  x. 

Ricardo,  David :  capital,  re- 
turns of  imiform,  8,  two 
meanings  of,  8;  classification 
of  productive  factors,  7; 
criticism  of  landlord  class, 
17;  criticizes  Malthus'  opin- 
ion that  rent  is  addition  to 
national  wealth,  17;  defini- 
tion, of  capital,  7,  of  labor, 
7,  of  land,  7,  of  rent,  16-18, 
of  rent  conflicting,  20;  dif- 
ferential applicable  only  to 
land,  13-14;  diminishing  re- 
turns and  rent,  14 ;  diminish- 
ing returns  applicable  only 
to  land,  15,  applicable  to 
capital,  15;  distribution  the- 
ory summarized,  89;  free 
trade  a  deduction  from  rent, 
19-20;  opposed  duty  on  im- 
portation on  corn,  20;  price 
determined  by  cost,  9;  rent, 
a  creation  of  value,  19,  a 
monopoly  return,  18,  as  na- 
tional wealth,  18-19,  a  sur- 
plus, 8,  criticized  by  Phillips, 
40,  not  a  cost  demonstrated, 
8-10,  not  a  cost  of  produc- 
tion, 8,  theory  of  criticized 
by  Carey,  123-124,  theory  of 
static,  13 ;  theories  applicable 
only  to  England  (Bowen), 
155-156;  theory  of  value,  6; 
wage  theory  opposed  by 
Tucker,  91-92. 

Ricardo  and  Carey :  their  the- 
ories contrasted,    126-128. 

Ricardian  rent :  opposed  by 
Cardozo,  77-79;  rarely  true 
(Bascom),  162;  tariff  advo- 
cates favor,  191. 


220 


THE    RICARDIAN    RENT    THEORY 


Senior,  N.  W. :  quoted  on 
American  conditions,  iii; 
rent  not  dependent  on  diflfer- 
ential,  103-104. 

Sidgwick:  criticism  of  Ricar- 
do's  rent,  16-17  n. 

Smith,  E.  P.:  disciple  of  Ca- 
rey,  141-142. 

Specific   productivity,   12. 

Substitution:  its  place  in  pro- 
portionality,  136. 

Tariff:  advocates  favor  Ricar- 
dian  rent,  191;  favored,  38; 
relation  to  rent,  19-20. 

Tax:  incidence  of  on  rent,  12- 

13- 

Tendency:  in  population  the- 
ory, 69-70. 

Theories  of  Ricardo  and  Carey 
contrasted,  126-128. 

Thompson,  R.  E. :  disciple  of 
Carey,  142;  estimate  of  Ca- 
rey, 114. 

Tucker,  George:  chap,  v;  bio- 
graphical sketch,  83-84;  cap- 
ital, demand  for,  94,  defined 
as  valuable  products,  93,  re- 
sults from  saving,  93,  supply 
of,  94 ;  criticism  of  Malthus, 
88-89 ;  differential  profits,  95 ; 
diminishing  returns,  104; 
labor  by  slaves  must  disap- 
pear, 93 ;  limited  returns, 
104-106;  population  a  statis- 
tical theory,  87-88,  increases 
with  improvement  in  hus- 
bandry, 90,  varies  inversely 
as  density,  88;  profits,  criti- 
cism of  Ricardo  on,  95-96, 
three  ideas  of,  96;  quasi- 
rent,  94;  real-wages  fall  if 
price  of  corn  rises,  91-92; 
rent  a  contractual  payment, 
96-100,  and  profits  obey  same 
laws,  94,  increased  by  land 
improvement,  100,  Ricardo's 
theory  criticized,  102-104, 
theory  patterned  after  Mal- 


thus, 96-100;  theories  sum- 
marized, 100-102;  value  de- 
fined, 85-87,  measured,  not 
caused  by  labor,  89 ;  wages 
as  related  to  mode  of  con- 
sumption, 90. 

Utility:   defined,    119;   of   man 
(Carey),  120-121. 

Value:  cost -of -reproduction 
theory  of  Carey  and  Perry 
contrasted,  185;  defined  by 
Perry,  181-182,  by  Tucker, 
85-87;  depends  on  utility  and 
labor-cost  (Bowen),  148; 
determined  by  labor-cost,  62; 
exceptions  to  Ricardo's  the- 
ory, 6-7  n ;  influenced  by 
labor  or  other  causes  affect- 
ing supply,  89;  labor-cost  of 
reproduction  (Carey),  120; 
measured,  not  caused  by 
labor  (Tucker),  89;  not  con- 
ferred by  nature  (Walker, 
A.),  173-174;  of  factors, 
how  determined,  12;  of  land 
determined  by  cost  of  re- 
production (Perry),  184;  of 
land  due  to  human  effort 
(Perry),  183;  of  man  (Ca- 
rey), 120-121;  resume  of 
authors,  192-193;  subjective, 
37. 

Vethake,  Henry:  chap,  iii; 
biographical  sketch,  67-68 ; 
checks  to  population,  69; 
diminishing  returns,  72,  81, 
82 ;  influenced  by  McCul- 
lock,  68;  population  regu- 
lated by  wages,  68;  rent, 
confusion  on,  72,  defined,  71, 
no  part  of  cost,  12 ;  "tend- 
ency" in  population  theory, 
69-70. 

Wages :  and  proportionality, 
89-90 ;  as  related  to  mode  of 
consumption  (Tucker),  90; 
governed  by  supply  and  de- 
mand,  27. 


INDEX 


221 


Wage- fund,  63-65. 

Walker,  Amasa :  chap,  viii ; 
biographical  sketch,  166-170; 
capital  embraces  land,  174; 
four  elements  of  rent,  175- 
176;  Malthusianism  opposed, 
170-172;  not  disciple  of  Ri- 
cardo,  177;  poverty  in  Eng- 
land a  result  of  faulty  dis- 
tribution, 171-172;  rent,  a 
product  of  fixed  capital,  174, 
defined,  173,  views  on  sum- 
marized, 175;  value  not  con- 
ferred by  nature,  173-174; 
wealth  defined,   174. 

Walker,  F.  A.:  differential 
profits,  14;  quoted  on :  his 
father's  (Amasa)  career, 
168. 

Ware,  N.  A. :  biographical 
sketch,  45. 

Wayland,  Francis :  chap,  iii ; 
biographical  sketch,  60-61 ; 
an  estimate  of  his   econom- 


ics, 61;  land  as  capital,  62; 
limited  returns,  66;  popula- 
tion depends  on  capital,  62; 
rent,  depends  on  location  and 
fertility,  65,  enters  into  price, 
62,  66;  value  determined  by 
labor  cost,  62;  wage-fund, 
63-65- 
Wealth:  defined,  119,  as  pro- 
ductive capacity,  36-37,  by 
Walker,  A.,  174;  includes 
immaterial  products  (Bow- 
en),  148-149;  omitted  by 
Perry,  181 ;  Raymond's  con- 
cept of,  24;  resume  of  au- 
thors,  191. 

West,  Sir  Edward:  diminish- 
ing returns,  14;  essay  on  the 
application  of  capital  to  land 
(181S),  14. 

Wilson,  Marcius :  land  classi- 
fied as  capital,  72-73;  dis- 
ciple of  Carey,  142. 


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